Trust and Estate Tax Returns
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Preparing tax returns for a trust or estate involves specialized rules. Federal law requires filing an estate tax return (IRS Form 706) if the decedent’s estate exceeds the federal exemption ($12.92 million in 2023; $13.61 million in 2024). Regardless of the estate tax, the estate’s income (from interest, dividends, rent, etc.) is reported on Form 1041. An estate must file Form 1041 if it has over $600 in gross income. With over 30 years of combined experience, Hemlock Financial Group’s experts prepare these federal returns accurately and on time, so executors and trustees can focus on their fiduciary duties.
Many states also impose estate or inheritance taxes at much lower thresholds than the federal exemption. For example, 16 states (plus DC) have estate/inheritance taxes, each with its own filing rules. An estate that doesn’t owe federal tax might still need a state return. Hemlock handles all required federal and multi-state filings, and advises on key elections (such as the Deceased Spousal Unused Exemption portability). We work closely with your attorneys and estate planners to align tax filings with your overall estate plan, providing peace of mind for every beneficiary.
What Are Trust and Estate Tax Returns?
Trust and estate tax returns are specialized filings required by the IRS and many states to report either the transfer of wealth from a decedent’s estate or the income generated by a trust or estate after someone’s passing.
Estate Tax Returns
Filed when an estate exceeds the federal exemption amount (currently over $13 million), or when an executor wants to elect spousal portability of unused exemptions. Some states impose estate or inheritance taxes at much lower thresholds, requiring separate filings.
Trust and Estate Income Tax Returns
Filed when a trust or estate earns more than $600 in annual income (from interest, dividends, rent, etc.). This form reports income, deductions, and distributions to beneficiaries.
These returns ensure that the estate or trust complies with federal and state tax laws, beneficiaries are properly credited with their share of income (via Schedule K-1), and fiduciaries meet their legal responsibilities. Because the rules are highly technical and deadlines are strict, most executors and trustees seek professional support to avoid costly mistakes.
Trust & Estate Tax Return Services
We offer comprehensive support for all trust and estate tax matters:
Federal estate and trust returns: Preparation and filing of IRS Form 706 (Estate and Generation-Skipping Transfer Tax Return) and Form 1041 (Income Tax Return for Estates and Trusts), including all related schedules.
State trust/estate returns: All required state-level estate or inheritance tax filings. Our team handles multi-state situations and knows each jurisdiction’s thresholds.
Income distribution and K-1 reporting: Maximizing the income distribution deduction and preparing Schedule K-1 beneficiary statements in compliance with IRS rules.
Elections & deadlines: Guidance on critical elections (e.g., spousal portability), exemptions, and strict filing deadlines (Form 706 is due 9 months after death; Form 1041 by April 15 for calendar-year estates).
Coordination with advisors: We collaborate with your attorney or financial advisor to integrate tax strategy with your estate planning goals, ensuring accurate and holistic service.
In addition to deceased estates, we manage tax filings for living trusts and other fiduciary accounts. Generally, any trust with more than $600 in annual income must file Form 1041. However, a revocable living trust (a grantor trust) does not file separately, the grantor reports trust income on their personal return. Once the trust becomes irrevocable (for example, upon the grantor’s death), we prepare the Form 1041 return, issue beneficiary Schedule K-1s, and apply all allowable deductions
Why Choose Hemlock Financial Group for Your Trust and Estate Tax Returns?
At Hemlock Financial Group, we prioritize accuracy, discretion, and responsiveness in every filing. Our meticulous approach helps protect the estate’s assets and ensures that all tax obligations are met smoothly.
With over 30 years of combined experience, our team has guided clients, trustees, and attorneys through the most complex estate and trust tax scenarios. We offer:
Specialized Expertise – Deep knowledge of IRS Forms 1041 and 706, income distribution deductions, Schedule K-1 reporting, and state-specific estate tax requirements.
Collaborative Support – Seamless coordination with your attorney, estate planner, or financial advisor so your legal and tax strategies work hand in hand.
Peace of Mind – Sensitive family and fiduciary matters are handled with professionalism, confidentiality, and care, giving both executors and beneficiaries confidence in the process.
Trust your trust and estate filings to Hemlock’s experienced team, your legacy will be in expert hands.
Frequently Asked Questions about Trust and Estate Tax Returns
A federal Estate Tax Return (Form 706) is required only if the total estate exceeds the annual exemption (e.g. $12.92 M in 2023, $13.61 M in 2024, $13.99 M in 2025). An executor may still file one to elect portability of any unused spousal exemption. Many states have their own estate/inheritance taxes with much lower thresholds. Even if a federal return isn’t needed, a state return might be.
If the estate generates over $600 in gross income after the decedent’s death, the estate must file Form 1041. This income could be interest, dividends, rent, etc. The estate’s income tax return is separate from the decedent’s final personal return. We handle the Form 1041 filing to report the estate’s income, deductions, and distributions correctly.
No. A revocable living trust is a grantor trust, meaning the grantor (person who created it) reports all trust income on their own tax return. The trust itself does not file Form 1041 while it is revocable. After the grantor’s death (when the trust becomes irrevocable), the trustee must file Form 1041 if income exceeds $600.
Estates file Form 706 to report the transfer of wealth (if above the exemption). Estates and trusts with income file Form 1041 to report that income. The decedent’s final individual income is reported on Form 1040 for the year of death. Beneficiaries of an estate or trust receive Schedule K-1 forms showing their share of any distributed income or deductions.
The executor or personal representative of the estate is responsible for filing the estate’s tax returns and paying any taxes from the estate’s assets. If a trust exists, the trustee files the trust’s tax return. Neither the executor nor the trustee pays estate taxes out of pocket; taxes are paid by the estate or trust.
Sometimes yes. Filing Form 706 can preserve a deceased spouse’s unused exemption for the surviving spouse. Even with no tax due, some states require a return to claim credits or determine inheritance tax. Hemlock advises whether filing is beneficial in low- or no-tax scenarios.