Massachusetts Tax Law: Filing Returns for a Deceased Person’s Estate

Understanding Massachusetts tax law is essential, especially when dealing with the complexities involving the filing of returns for a deceased person's estate. When someone passes away, their financial obligations do not simply dissipate; beneficiaries and executors must navigate a myriad of tax laws and regulations to ensure compliance.

In Massachusetts, the estate of a deceased person may be subject to several types of taxes, including estate taxes, income taxes, and potentially federal estate taxes. The executor or personal representative is typically responsible for managing the deceased’s financial affairs and filing the necessary returns.

1. Massachusetts Estate Tax
Massachusetts imposes an estate tax on estates valued over $1 million. The tax applies to the total value of the estate, which includes real estate, bank accounts, investments, and personal property. Executors must file the Massachusetts Estate Tax Return (Form M-706) within nine months of the date of death. Extensions can be requested, but taxes owed must still be paid on time to avoid penalties.

2. Filing Federal Estate Taxes
In addition to state taxes, the federal government may also assess estate taxes. Estates valued over $12.92 million (for 2023) are required to file the IRS Form 706. It is crucial to determine if the estate exceeds this threshold to comply with federal requirements and avoid additional liabilities.

3. Income Taxes for the Deceased
The deceased’s income tax returns must also be filed for the year of death. This includes any income earned until the date of death. If the individual earned income in the year they passed away, the executor must file a Massachusetts Income Tax Return (Form 1) for the deceased and ensure that all income is reported accurately. Furthermore, if the estate generates income, it must file a separate income tax return (Form 2) to report that income until the estate is settled.

4. Important Deadlines
Filing deadlines are crucial to avoid penalties. The Massachusetts estate tax return is due nine months from the date of death, while the federal estate tax return has the same timeline. The income tax return for the deceased is typically due on April 15 of the year following death, unless an extension is filed.

5. Special Considerations
Certain deductions and exemptions may apply at both the state and federal levels. For example, expenses related to funeral costs, debts, and specific estate-related expenses can reduce the taxable value of the estate. Executors should keep detailed records of all expenses related to managing the estate for accurate reporting and potential reductions in tax liability.

6. Working with Professionals
Given the complexities of tax law, it is often beneficial to work with tax professionals or estate attorneys. They can provide crucial guidance on navigating the legal landscape, ensuring all returns are filed accurately and timely, and optimizing the tax position of the estate.

Filing returns for a deceased person's estate under Massachusetts tax law can be complicated, but understanding the requirements and procedures can help executors fulfill their responsibilities effectively. By staying informed about deadlines, tax obligations, and available deductions, those involved can ensure compliance and mitigate tax liabilities for the estate.