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What should executors need to know about state estate taxes?

Part of your duties as an estate executor is paying taxes. You not only have to file the last tax return for the individual if he or she does not have a spouse to file but also you must file a tax return for the estate.

Estate tax filing must be done if the value is over $1 million. The taxes cover the value of the estate before you transfer anything to heirs.

Personal liability

You could become personally liable for any taxes due if you fail to file a return. You must use Form M-706 to file in the state. If money is due, you need to pay it out of the estate. If you do not, then you may have to pay it from your personal funds. It is imperative to ensure you know when and how to file to avoid personal liability.

Points of note

You have nine months to file the tax return after the person dies. You may be able to get an extension, but you will have to pay at least 80% of the amount due before the deadline. If you do not pay on time, you could face fines and penalties. You also will have to pay interest on taxes not paid by the deadline date. To file for an extension, you must submit Form M-4768. You must show some type of hardship or other reasonable situations preventing you from paying on time to get an extension. You could receive up to six additional months to pay.


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