Are Probate Fees Tax Deductible?

If you’re a trusted representative for an estate, you may wonder what to do when tax season rolls around. Executors or administrators are responsible for filing the estate’s taxes. Learn whether probate fees are tax deductible so you know what to expect.

Filing Taxes During Probate

Although each situation is unique and tax requirements may vary, individuals can’t file costs associated with the probate. Instead, the estate is responsible for these probate-related expenses.

An estate executor must file a final tax return for the decedent, generally with an IRS Form 1040. On this form, you must identify any income the person received until the date of their death.

You can also report any deductions or credits the person would have filed. If a tax refund is received from this process, the money returns to the estate.

The United States government identifies estates as separate legal entities from the deceased, so you may also need to fill out a tax return for the estate. This document is called a fiduciary return or IRS Form 1041.

About Fiduciary Return Deductions

If the estate generated at least $600 in gross income during the tax year, an estate executive must submit a fiduciary tax return. This IRS Form 1041 must be completed around 11 months after the month the deceased person passed away.

For each subsequent year that the estate stays open and generates the income limit, the estate executor must repeat this process of filling out the IRS Form 1041.

Any sales of assets, such as real estate, may also require an estate executive to fill out the fiduciary return. Even if the sales don’t generate an income, you must report them to the IRS.

You must also fill out the form if any estate beneficiary isn’t a U.S. citizen.

Are Funeral Expenses Tax Deductible?

Funeral and burial expenses are tax deductible when the estate pays for them. The estate executor must file an estate tax return, Form 706.

Some listed items can include the cost of a memorial service, the cost of moving the body and the cost of the burial plot with a tombstone.

Are Estate Administration Fees Tax Deductible?

If managing the estate incurs some expenses, you can file those as deductions on the IRS Form 1041. These may include the costs for a service, accountant fees or attorney bills.