When a person dies, a final individual 1040 tax return must be completed to report the income up to the date of death for that year. If there is a surviving spouse, a return is completed as Married Filing Joint. Full exemptions and deductions are allowed as though the decedent was alive for the entire year. When a will exists there is a person designated as an executor, personal representative or administrator of the decedent’s estate. This person would handle any paperwork for the return and any balances due or refunds received.
Upon the date of death, any assets the decedent owns become property of an estate which is created and given a Federal Identification number as a separate entity. If the assets held in the estate generate $600 or more of gross income during the year, an estate return (Form 1041) must be filed. Again, the person appointed as executor of the estate would handle gathering this information. If there are assets in the estate that are to be distributed to beneficiaries and if there is property to be sold, the estate would remain open until this takes place and a return will be filed for each year it is open. A closing certificate is requested when a final estate return is filed and the entity is dissolved.
A trust must be created by an attorney. A trust is an entity created to hold assets and can be created while a person is alive and referred to as a living trust. The trust may also be created according to instructions in a will (Testamentary trust). The trust tax return is also Form 1041 and is required to be filed if there is gross yearly income of $600 or more. A trust may be set up to stay open for many years. Either the trust pays the taxes on the income or the income from the trust can be distributed to specified beneficiaries each year. A tax return is filed each year reporting the income from the assets. Any beneficiaries would receive a K-1 form from the trust reporting their share of the income.
We help you sort through the complexities. You do not have to wait until tax season arrives. We can begin working for you today, so call Consulting Services Tax & Accounting at 608-233-9769.
At Consulting Services Tax & Accounting, we know that sometimes life can be complicated, and that can make doing your taxes even more difficult. Sometimes, things can just get away from you, and before you know it, one or more years have gone by. That's why we want to work with you, to make it easier to get caught up and current with your tax filing obligations.
Sometimes in life you've got to move around. Your work life can take you to many different places, whether it's a short-term assignment, or a long-term move, this may mean that you will need to file a tax return for multiple states. Many smaller tax preparation firms lack either the expertise or the software to handle multi-state filings. With Consulting Services Tax & Accounting, you can count on us to get all of your tax problems under control, no matter what state filings may be involved.
If you own a small business, you have enough on your mind just trying to handle your day-to-day affairs and help your business grow. Tax time often adds an even greater burden to the small business owner because the rules for deductibility, depreciation, and how to determine your taxable income can be confusing and time consuming. We want to make tax time easier for you, so you can get back to focusing of the running your business.
Whether you've owned a small business for a while, or you want to start your new business with a plan for the future, the staff at Consulting Services Tax & Accounting is here to help. We can advise you on the best route to take whether it is the formation of an LLC, Partnership, S-Corp, or a C-Corp, and what the advantages and disadvantages are for each type of entity, so that you'll be prepared to make the best possible choice for your businesses future.
As a full service tax preparation firm, not only do we offer professional tax preparation we also offer in house accounting and payroll services. Call us today and we will be happy to set up an appointment for a free 30 minute consultation before we begin working together.
Consulting Services Tax & Accounting is available and has regular office hours Monday thru Friday year-round to assist you with any and all tax, accounting and payroll issues that may arise.
You can count on Consulting Services Tax & Accounting to provide you with high-quality services and expert advice that will put all of you tax time worries to rest.
If you have a unique or difficult tax situation, we are always here to help you. We have seen many different tax scenarios in our 45+ years of service to the Madison area.
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