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What are the tax-related responsibilities of an estate executor?

On Behalf of | Jan 11, 2024 | Estate Planning

The Tax Foundation reported the average payment for federal estate taxes in 2021 was $30.5 million. While most estates will not be large enough to require payment of that type of tax, there are still tax responsibilities the executor must handle.

The executor must ensure he or she finalizes all tax filings and duties for the estate.

Final income tax return

Filing the final income tax return for the deceased individual covers the period from the beginning of the tax year to the date of the individual’s passing. The executor must report income earned during this time, such as interest, dividends and any remaining salary. It is important to also take any tax deductions or credits applicable to the deceased person.

Federal estate tax

Arkansas does not have an estate tax, but the federal government does. However, it only applies to estates worth more than $13.61 million as of 2024 after deductions. Most estates will be exempt. Still, if the estate owes this tax, the executor needs to file a return and pay it.

Outstanding liabilities

Handling the tax liabilities of the estate involves settling any outstanding tax debts the deceased owed. The executor may need to get access to past returns and tax accounts to ensure they handle all tax obligations.

Serving as an estate executor involves making sure to handle the deceased taxes properly. By carefully managing the tax aspects of the estate, the executor helps to avoid issues that could lead to trouble for the estate’s heirs in the future.