How are taxes handled in probate?
When someone dies, taxes are owed for their last tax year. Upon death, an estate is also created which is a separate tax entity. Depending on the income and size of the estate and the decedent’s income, a final federal income tax return will need to be filed and potentially a Federal Fiduciary Income Tax return for the estate, a Federal Estate Tax return, and a Federal Gift Tax return. The executor also needs to file the final state income tax return.
Along with state and federal taxes, the personal representative or executor may also need to pay other final taxes such as real estate taxes, personal property taxes, business taxes, and special assessments.
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