The time to review and file the estate income tax returns occurred simultaneously with closing the estate. According to the article Closing the Estate: Final Tasks to Close the Estate, on October 29, 2013, I was dealing with the professionals to send a final invoice. On that same day, the fiscal year returns, both federal and state, arrived in the mail for my review. Since the tasks of closing the estate and reviewing the fiscal year returns weren’t burdensome, the timing was fortunate. The arrival of the fiscal year returns would allow me to review and file the returns while closing the estate. So, the only task remaining after closing the estate would be dealing with the short year returns.

Review and File the Fiscal Year Returns

At the time the fiscal year returns arrived in the mail, I was asking the professionals to send me their final invoices. The timing was impeccable because I could clean up the estate in one mailing. In the same mailing, I would send the beneficiaries the following documents:

• The final distribution checks from the estate reserve.
• Schedule K-1(FORM 1041).
• Massachusetts Schedule 2K-1(FORM 2).

So, after paying the professionals, the first task was to review and file the returns. After filing the returns, I would calculate the distribution before mailing the above documents. Additionally, the review of the returns didn’t involve rocket science. The review process involved the following steps:

1. To make sure all income items sent to the tax professional existed on the returns, both state and federal.
2. Ensure all the demographic information for each beneficiary was correct on the returns.
3. Verify that the social security number for each beneficiary was correct.
4. Report any discrepancies to the tax professional.

Fortunately, after spending some time looking through my record keeping system and all the 1099’s, the returns looked complete. So, on November 1, 2013, the file and review process ended for the fiscal year returns. On that day, I sent the federal return to the IRS and the state return to the Massachusetts DOR.  

After filing the fiscal year returns, my attention turned to calculating the estate reserve distribution. The calculation took a little thought, but eventually, I wrote the checks. So, on November 12, 2013, along with the distribution checks, I sent the documents listed above to each beneficiary. Additionally, on November 25th, all the distribution checks cleared. With the estate closed and the fiscal year returns filed, only the short year returns remain.

Review and File the Short Year Returns

Fortunately, the short year returns were basically for cleanup purposes. There was some taxable carry over activity after the fiscal year ended that needed reporting. Furthermore, with the deadline met, the tax professional decided to delay the short year returns until after the upcoming holidays.

On February 19, 2014, the short year returns arrived, both federal and state. The review process was very simple since there were only a few taxable items to verify. The next day, after completing the review and file process, I signed the returns and mailed them to the taxing authorities. In addition, I sent the proper schedules to each beneficiary.

After dealing with the short year returns, there were no more tasks remaining in the estate administration. The estate administration was finally over.

The Aftermath

When the estate finally closed for good, the anxiety didn’t go away. Until the tax season was over and the beneficiaries filed their personal returns, then I could move on. Basically, we were expecting a hectic tax season in 2014 because of the complex nature of the estate income tax returns. So, when April 15, 2014 passed with only a couple of questions, I was finally able to move on. Additionally, as of April 15, 2017, the time to audit the returns expired putting the estate administration in the past. Finally, today I can write confidently about the experience.

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