If you receive money or property that is left to you by someone who has died, you do not need to report it on your income tax return unless it came from a retirement plan. However, the personal representative or a survivor of the person who died may have to file tax returns for the estate. The personal representative may be an executor, administrator, or anyone in charge of the property of the person who died. Refer to Topic 356 for income tax returns that may be required.

An estate is a taxable entity that comes into being with the death of an individual and exists until all the assets are distributed to the beneficiaries. The personal representative may have to file income tax returns for the estate on Form 1041, U.S. Income Tax Return for Estates and Trusts, and make quarterly estimated tax payments. In addition, Form 706, U.S. Estate Tax Return, generally must be filed within 9 months after the date of death if the value of the gross estate at the date of death was more than $600,000.

The gross estate of a decedent consists of any money, real property, or other assets the decedent had an interest in at the time of death.

Deductions and a special credit, called the unified credit, are allowed which may reduce or eliminate any tax. Please note that if the amount of the gross estate requires a return to be filed, it must be filed even if the deductions and unified credit make it a return with no tax due.

For more information, refer to Publication 950, Introduction to Estate and Gift Taxes.

For information on your federal tax responsibilities if you are settling an estate, refer to Publication 559, Survivors, Executors, and Administrators.

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