When United Kingdom residents begin their duties as the executive of a loved one’s estate, they may expect to fill out paperwork and distribute assets. They may not, however, consider the tax duties that come with this position.
The executor of an estate usually files a tax return for the deceased. The Internal Revenue Service says that the executor usually needs to report any income the deceased earned before his or her death. This tax return typically also needs to include deductions and credits. The executor is also responsible for making sure income taxes are paid. Sometimes the estate administrator may find out that the deceased has not filed an income tax return for several years. In this situation, he or she is generally responsible for filing these tax returns and paying any money the deceased owes.
The estate administrator typically acts on behalf of the person who has died in all tax matters. According to the Internal Revenue Service, this includes filing an estate tax if the estate is large enough to be subject to this tax. This tax is for the assets which the beneficiaries of the estate received. Additionally, estates usually owe income tax if they earned more than $600. An estate might earn income if the deceased earns dividends from an investment, for example. The executor is the one who generally files this tax return.
Sometimes a person may have operated a business before his or her death. If this business is part of the estate, then the executor is typically responsible for any taxes the business owes. This means the estate administrator may need to report the income the company earned, as well as how much the employees earned in wages.
