TL;DR: I have no tax forms to file for my mom’s estate, and have no idea how I can get them in time. This isn’t the one-time estate taxes, this is the income tax on the estate. It probably doesn’t own money, but it sold a house for about $1M, so I assume it needs to file.
Longer version
So, I asked the accountant to do the taxes ages ago. He asked me to mail him the documentation, so I did.
No reply.
So I called and asked if they needed anything more. “yes, they got my documents, but haven’t looked at them yet”.
I followed up a few weeks later, and he said, “yes, I think I just finished your mom’s taxes”. “Great, I look forward to getting them”.
He mailed the trust taxes to my brother. (who is the trustee, so that part is good.) Nothing. So I called back asking about the estate taxes. After about a week of phone tag, I reached the accountant, who said that he’d sent the forms to bro, because he’s the trustee. But what about my mom’s taxes, I asked. that’s April 4
April 10 I get an email saying :
Lou and I took a look at your mother’s 2021 individual tax return to see investments that she had held in her name that could generate investment income that would be on an estate income tax return for 2022. There were two accounts- a Charles Schwab and Fidelity which looked like they were liquidated and distributed during 2021 meaning that there should not be any taxable income in 2022 on these two accounts.
We do have information for one month of Social Security and some bank interest from Bank of America, but based on these items we do not believe that in income tax return is due for the estate for tax year 2022.
Please let us know if you are aware of any other income that we have not accounted for yet.
I replied:
The estate sold her house, and a lot of other stuff. Don’t we need to file, even if the stuff was sold at a loss? That’s a lot of income.
I sent you the sales information.
Which I did – I sent the valuation of the house, the the sales agreement, a spreadsheet documenting the value of the other stuff, and what we sold it for, some expenses…
Crickets.
What do I do? Is there consumer software I can use to file estate income taxes? It’s probably not super complicated, as estates go. I assume that even if I mess up, we are in a better position if I file something than it I don’t file anything. I’m kind of panicking here.
I’m far from an expert, but you can file for an extension.
Also, if taxes aren’t owed, there’s no penalty for filing late, IIRC.
I hope someone more knowledgeable checks in here soon. But meanwhile, don’t panic!
You can file for an extension, which will get you out of the penalties but you will still have to pay interest on any amount owed.
It’s not super surprising that you’re not getting a lot of response since this is the busiest time of the year for accountants. I made the mistake of opening my own business in April 1 last year, I was very lucky to get an accountant on the phone, but we didn’t do any set up til mid may.
Don’t fret too much, do file for the extension, and if nothing is owed you will be fine. If there is something owed, you’ll have to settle it but no IRS agents are going to come arrest you or seize your assets or anything. You have to be a real jackhole for that to happen, or have someone else being a real jackhole in your name.
Qadgop_the_Mercotan is correct. If you are expecting a return there’s no penalty for filing past the deadline. The reason for this is because the IRS calculates the penalty based on what you owe, so no owe = no penalty. H&R block is a pretty good resource for most tax stuff, IMHO, I’ve used the online software the last few years. You can file an extension there too . I would also report the accountant’s failure to provide you the correct forms in a timely fashion, IIRC there are laws about that. Don’t forget, too that the deadline is April 18 since April 15 falls on a Saturday this year, so you have a extra couple days. My condolences on the loss of your Mom.
Thanks, all. If i can just figure out what form to file to request an extension, it should be fine. I don’t expect the estate to let any tax, and if it does, the amount will be small.
Sigh. I really want to settle this and be done.
Thanks.
If there is no gain on the home, and it wasn’t used in a business so that the loss is not deductible, then it is not necessary or desired to file a 1041 for the estate, UNLESS you received a 1099-S at the sale of the house. Often one is not issued if the seller fills out a form and warrants that there is no taxable gain on the sale, but that’s not always done. If there is investment income in the estate of more than a negligible quantity, then you’ll want to file a 1041 regardless.
If you do need to file a 1041, it will most likely be because there is some tax due. Filing an extension with form 7004 will get you out of failure to file penalties for 6 months, but not failure to pay penalties. Both of those are based on the tax due, and the FTF penalty is much larger than the FTP penalty. If you have no idea how much you’ll owe it doesn’t make a ton of sense to send in an extension payment, but if the estate has money lying around that it can spare for a few months to be held by the government, you might as well send it in along with the form 7004 after filling out part II of the form.
To fill out Form 7004, you just need the EIN, name and address of the entity. If this is truly a decedent’s estate and not a trust of some kind that many people get confused with estates, then the code in Part 1 is 04. If it’s actually a trust, then it’s a code 5.
Form 4768
Application for Extension of Time To File a Return and/or Pay U.S. Estate
That’s for estate tax, which is different than estate income tax.
Thanks. It’s the estate. And it is income taxes on the estate, not the initial estate taxes, which were filed. There is also a trust, but the accountant completed the taxes for that. The house was owned by the estate.
I never got a 1099-S. At least, i certainly don’t think i did. Who would have sent one?
If your accountant had done the estate return in the past, then they should be filing an extension for the return even without you requesting it as long as it’s not done by the due date. Of course, not all of them will decide to extend that level of service to their clients, even though it should be relatively easy to do with good software made for professionals.
You would be given one at the closing of the house. I can’t really tell you what it looks like other than being labeled “1099-S”, since probably everyone uses a slightly different but functionally identical form. Here’s the default version:
I’ve just read the longer story now, and it pretty much checks out. If it hasn’t been years since your mother died, it’s extremely unlikely that there’s a gain on the sale of the house, and the only reason to file would be for a small amount of investment income. If this isn’t the first estate income tax return being filed, there shouldn’t be any way for there to be Social Security allocable to the estate. Well, I guess if she died in December and SSA wasn’t notified until after they sent the January check, and there was investment income in the estate in December after she died. I guess that’s at least not entirely unreasonable to have happened given a lot of mutual funds only distribute income in December.
If they looked over the house closing papers already, they would presumably have noticed there was no 1099-S, and they probably know there’s little chance they need to report a gain on the house, and they know the investment income is negligible, so they simply don’t have any reason why they should work on the “return”. Ask them at least if they filed an extension, because our office would have done so automatically, even if we didn’t think we’d ever file a return, simply because it’s more work to not file one because it means unclicking it after choosing “Select all not filed” when batch creating extensions.
No, the house sold for about what it was valued at when she died, and after the expenses of selling it, it was a small loss. (Well, small as a percent, the house sold for about $1M.)
We also sold a lot of the stuff, but for less than it was valued on the estate tax return.
She died a year ago January, and other than selling the house and stuff, the estate’s income was negligible. It earned a couple of dollars on a bank account, but my brother had moved all her liquid assets into the trust before she died. (He’s the trustee, and I’m the executor.) And the accountant did complete the trust’s tax form. They tell me the trust owes a little money.
Thanks, this has been tremendously helpful.
accountant says he’ll file an extension, and I said thanks, let’s talk after the rush.
It looks like it will be fine. Thanks again, you were incredibly helpful.