When Are Estate Taxes Due?

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When someone dies, someone must take on the tasks of finalizing his or her estate. If the decedent had a will, this individual is the executor who is named in it. If the decedent died without a will, the probate court appoints someone to serve as the personal representative. He or she is ultimately responsible for paying any estate taxes that are due.
An estate tax or death tax is paid out of the decedentís estate after his or her passing.

Role of the Executor

The executor has many important jobs. He or she identifies the assets of the estate and safeguards them. He or she is responsible for notifying beneficiaries, heirs and known creditors of the decedent. He or she may also have to publish a public notification of the decedentís death and his or her appointment.

Filing of the Final Income Tax Return

The executor is also responsible for filing the decedentís final income tax return and for paying any taxes the decedent owes. The executor may be held personally liable if any underpayments are made to the Internal Revenue Service. He or she may be required to pay these taxes as well as penalties and interest if inaccurate information and underpayments are made to the Internal Revenue Service. This tax return covers the period between the beginning of the year until the date of the decedentís death during the same year. The return filing date is the same as for living taxpayers. If the decedent was married and filed jointly, the final return may cover the decedentís income and deductions until death and the surviving spouseís yearly amount of income and deductions.

Additionally, the executor may have to file the estateís income tax return. This return is necessary when the decedent owns holdings after his or her death that comprises the estate. The estate must account for any taxes that it owes the government. If the decedent had less than $600 worth of income, this tax return is not necessary.

Federal Estate Taxes

Federal estate taxes are only payable when the decedentís estate is sizable. At the time of publication, estates are only subject to the federal estate tax if they are valued at more than $5.49 million and then only to the amount that they exceed this figure. The estate tax rate may be up to 40 percent. These taxes are due when the executor files the estateís estate tax return. This is completed by filing Form 706. This form is due nine months after death. If the decedent made any sizable gifts, the excess over the gift tax exemption is re-figured to determine the appropriate amount of estate taxes.

Calculating Federal Estate Taxes

The estate tax is calculated from the decedentís gross estate. This includes the total value of the estate that takes into consideration the decedentís land, real estate, businesses, investments, bank accounts and other assets owned at the time of the decedentís death by the decedent.

The amount of life insurance is also added into the decedentís estate. However, if the beneficiary of the policy goes to the surviving spouse, this asset is not included in the decedentís estate as long as the surviving spouse is a citizen of the United States due to the unlimited marital deduction privilege.


An extension for the federal estate tax return may provide an additional six months. A 3-month extension is often granted if the amount of estate tax that the estate owes is more than the money in the estate. This extension allows for the payment of estate taxes one year after the decedentís death instead of the typical 9-month timeframe. This additional time allows the executor to liquidate other assets in order to generate the funds necessary to pay the total amount of estate taxes due. Other extensions may grant an additional year to extend the amount of time to pay, up to a maximum of 10 years. The executor may have to establish undue hardship or a reasonable cause to justify why the tax was not made in a timely manner.

Legal Assistance

Due to the risk that an executor has if any mistakes are made, it is important that he or she seek competent assistance. This may include hiring an accountant to handle the filing of tax returns. He or she may also consult with a financial advisor for assistance. These steps may help reduce taxes due on the estate or to clarify if any estate taxes are due.
A probate lawyer may also be consulted for assistance with the final expenses, debt payments and distributions to beneficiaries. A lawyer can explain the executorís legal duties and responsibilities to avoid any possible problems.

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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.

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