Help with filing trust/estate taxes for the first time

hrmbassociate

I’m handling tax prep for a deceased parent’s trust/estate for the first time and feeling a bit lost. Not sure which forms are required or whether I should use software or a tax professional. Any tips, experiences, or service recommendations would really help.

JanaA

Hello hrmbassociate!

Handling tax preparation for a deceased parent’s trust or estate for the first time can feel overwhelming, especially since the rules and required forms are different from a standard individual tax return. Let’s break it down so you have a clear starting point.

When someone passes away, there are often two separate tax filings to consider:

1. Final Individual Income Tax Return (Form 1040)
-Covers income earned from January 1 through the date of death.
-Filed as usual, but marked “Deceased” with the date of death.
-You may need to sign as the personal representative or executor.

2. Estate or Trust Income Tax Return (Form 1041)
-Required if the estate or trust earns more than $600 in gross income during the tax year (interest, dividends, rent, capital gains, etc.).
-Reports income the estate or trust earns after the date of death until assets are distributed.
-Beneficiaries may receive a Schedule K-1 showing their share of income to report on their own returns.

You’ll need:
-Death certificate (for records)
-Will or trust documents
-Letters testamentary or similar proof of authority
-Bank, brokerage, and investment statements
-Property sale records (if applicable)
-Prior-year tax returns
-Any 1099s or other income statements issued to the estate/trust

FreeTaxUSA supports the filing of form 1040 for a deceased individual. We would be happy to assist you with this process.

We do not however file form 1041. If you determine based on your situation that you need to prepare an estate return, you may want to consider hiring a tax professional that can assist you.