Does every estate have to file a Pennsylvania estate tax return?

On behalf of Scaringi Law posted in Estate Planning on Monday, November 9, 2015.

Although readers may be familiar with the federal estate tax exemption, some may not realize that even estates under that exclusion threshold may need to file an estate tax return.

In particular, Pennsylvania law requires an inheritance tax return for every decedent who had property that is or might be subject to tax. This fiduciary obligation generally falls upon the personal representative or other executor of the estate. The filing requirement is an opportunity to take an inventory of the estate's assets and property ownership.

At the state level, the applicable return is Form REV-1500. At the federal level, the applicable estate tax return is IRS Form 706. Both forms are generally due for certain estates nine months after the decedent's death. However, a request for an extension may also be made to the applicable governmental entity. The IRS, for example, may grant a six-month extension to estates that made a timely request and paid the correct amount of estimated tax.

In addition to estate taxes, an executor may also need to file an income tax return via IRS Form 1040. Since an estate is regarded as a separate legal entity, it must report income of $600 or more.

Advance planning can prevent such tax issues from coming as a surprise. Our law firm focuses on estate planning and elder law. We can help individuals understand the tax implications of their bequests and intended transfers to beneficiaries and other loved ones. From basic advice about wills and trusts to complex tax planning, we offer a full spectrum of services.

Source: Internal Revenue Service, "Frequently Asked Questions on Estate Taxes," copyright 2015, IRS