What do executors and administrators need to know about filing taxes for estates?

Serving as an executor or administrator means supervising the estate’s finances and tax obligations from the date of death until assets are distributed. The role typically includes filing the decedent’s final individual income tax return (Form 1040), reporting any income the estate earns during administration (Form 1041), and determining whether a federal estate tax return (Form 706) is required. Executors also must obtain an employer identification number (EIN) for the estate, issue beneficiary reporting (Schedule K-1), and follow state filing rules where applicable. For authoritative details on these forms, see the IRS pages for Form 1041 and Form 706 (IRS.gov).

Author credentials

With over 15 years in personal finance and tax compliance as both a CPA and CFP®, I have prepared final returns and fiduciary filings for a wide range of estates—from small household estates to multi-million-dollar portfolios. This guide reflects practical steps I use in client work and points to official IRS resources for reference.

Key forms you will encounter

  • Final individual income tax return (Form 1040): the decedent’s final calendar-year return reporting income up to the date of death. Include income, deductions, and credits earned before death.
  • Form 1041 (U.S. Income Tax Return for Estates and Trusts): used to report income earned by estate assets during administration; if gross income is $600 or more, or a beneficiary is a nonresident alien, the estate generally must file (see IRS: About Form 1041).
  • Schedule K-1 (Form 1041): shows each beneficiary’s share of estate income, deductions, and credits; beneficiaries report amounts on their own returns.
  • Form 706 (United States Estate Tax Return): filed if the gross estate exceeds the federal estate tax basic exclusion amount for the year of death (the exemption is indexed annually; check current amount on IRS Form 706 guidance).
  • Form SS-4: to request an EIN for the estate so the executor can file returns and pay taxes.
  • Form 56 (Notice Concerning Fiduciary Relationship): optional but useful to notify payers and taxing authorities of the fiduciary appointment.

Key IRS resources (official)

Step-by-step checklist for executors (practical)

  1. Locate the decedent’s tax records and the will; determine who is legal executor or administrator.
  2. Get a certified copy of the death certificate and open a separate bank account for the estate.
  3. Apply for an EIN (Form SS-4) for the estate—don’t use the decedent’s Social Security number for estate income after death (see IRS SS-4 guidance).
  4. Prepare the decedent’s final Form 1040 for income earned through the date of death.
  5. Determine whether the estate will produce income during administration that requires Form 1041. If so, set up bookkeeping for estate income and expenses.
  6. Value assets for estate and income-tax purposes; establish cost basis (generally the date-of-death value for inherited assets — see IRS Topic 701).
  7. Determine whether Form 706 is required by checking the year-of-death federal exclusion amount (indexed annually). If the estate approaches the threshold, engage a tax attorney or CPA.
  8. Prepare and file required federal and state returns and make estimated tax payments if necessary.
  9. Provide Schedule K-1 to beneficiaries and ensure tax reporting flows to their returns.
  10. Keep thorough records for later audits and for distribution accounting to beneficiaries.

Practical timelines and deadlines

  • Final Form 1040 (decedent): due the usual filing date for that tax year. If the decedent’s final tax year ends on December 31, the return is due the following April (or the next business day if April 15 falls on a holiday/weekend).
  • Form 1041 (estate): due on the 15th day of the fourth month after the estate’s tax year ends. Most estates use a calendar year, which makes the due date April 15 (check current IRS calendar for exact dates). A 6-month extension can be requested, but an extension is for filing, not payment.
  • Form 706 (estate tax): due 9 months after the date of death. Executors can request a 6-month extension to file, but tax payments or estimates should be handled according to IRS rules to avoid interest or penalties. (See IRS: About Form 706.)

Income, basis, and distribution basics

  • Income earned after death but before distribution (for example, rental income, dividends, interest) belongs to the estate and is reported on Form 1041.
  • Beneficiaries generally get a step-up (or step-down) in cost basis to the fair market value at the date of death (or alternate valuation date when applicable). This affects capital gains reporting when beneficiaries later sell inherited property (IRS Topic 701).
  • Deductions: funeral expenses, estate administration costs, and certain debts generally reduce the gross estate for estate-tax purposes; income-tax deductions on Form 1041 are narrower and follow trust/estate rules.

State taxes and local issues

State rules vary: some states have estate or inheritance taxes with much lower filing thresholds than the federal exemption, and some have supplemental filing requirements for income. Always check the decedent’s state of residence and any state where property is located. Useful internal guidance: see our FinHelp articles on Filing Taxes for Estate and Trust: Forms and Deadlines and Executor’s Quick Guide: Essential Steps in the First 90 Days.

Common pitfalls and how to avoid them

  • Missing assets or undervaluing holdings: do a full inventory and get professional appraisals for unusual or high-value items.
  • Waiting too long to request an EIN: without an estate EIN you can’t file Form 1041 correctly or deposit estate checks easily.
  • Confusing estate and individual tax issues: the estate’s income is separate from the decedent’s final personal income; maintain separate bookkeeping.
  • Overlooking state filing requirements: state thresholds can be much lower than federal.

Forms table (quick reference)

Form Purpose Typical trigger
Form 1040 (final) Final individual income tax return for the decedent Any income earned by decedent before date of death
Form 1041 Income tax return for an estate or trust Estate gross income ≥ $600 or beneficiary is nonresident alien
Schedule K-1 (Form 1041) Beneficiary’s share of estate income When Form 1041 reports distributable income
Form 706 Estate (and GST) tax return Gross estate exceeds federal exclusion for year of death (check IRS)
Form SS-4 Apply for an EIN for estate Needed before filing Form 1041 or opening estate bank account

Real-world example (brief)

An executor I worked with inherited a small rental home and several brokerage accounts. The estate produced rental income and dividends over the 10 months of administration. We: (1) obtained an EIN, (2) filed the decedent’s final Form 1040, (3) tracked estate income and expenses, (4) filed Form 1041 and issued Schedule K-1s so beneficiaries could report their distributed shares, and (5) kept detailed records to support deductions for legal and accounting fees. The estate did not meet the federal estate-tax threshold, but we still reviewed state tax exposure.

When to hire professional help

Engage a CPA or estate attorney if any of the following apply: the estate is close to or above the estate-tax threshold, the asset mix includes business interests or hard-to-value property, beneficiaries disagree on distributions, or you lack time/comfort with tax reporting. Professional help reduces audit risk and can identify tax-saving elections.

Additional FinHelp resources and internal links

FAQs (concise answers)

  • Is Form 1041 required for every estate? No. Form 1041 is required if the estate’s gross income is $600 or more during the tax year or if a beneficiary is a nonresident alien. (IRS: About Form 1041.)
  • When is Form 706 required? File Form 706 if the gross estate exceeds the basic exclusion amount for the decedent’s year of death; the exclusion changes annually, so confirm the current figure on the IRS Form 706 guidance page.
  • What if beneficiaries receive distributions? Distributions to beneficiaries are typically reported on Schedule K-1. Beneficiaries report their share of income on their tax returns.

Professional disclaimer

This article is educational and general in nature. It is not a substitute for personalized tax or legal advice. Executors with complex estates should consult a licensed CPA or estate attorney. For official forms and filing instructions, refer to IRS resources (forms and publications linked above).

Authoritative sources

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