Believe it or not – it’s still tax season!
Originally taxes were supposed to be due April 15, 2020. However, due to COVID-19, we have been given extra time to file federal income tax returns and make federal income tax payments. The new tax deadline has been extended to July 15, 2020.
Before the new deadline arrives, it is important that your taxes are filed correctly and on time. In this blog, we will explain the basics you will need to know in order to help make filing your estate and trust tax returns in Riverside easier.
What Documents Do You Need to File Your Taxes in Riverside, CA?
Basic tax filing requires that you have the following documents:
- Personal Information: Your social security number or tax ID number
- Income Information: If your estate or trust had business income, you must attach the standard IRS Schedule C or C-EZ to declare gross income, deductions and net taxable income.
- Deductions: The IRS gives estates and trusts several deductions that may need to be documented such as interest paid out. If you have investment interest to deduct, you must attach Form 4952. Estates and trusts can also deduct charitable donations, which are documented with Form IRS 1041-A.
- Tax Payments: The third and final section of IRS Form 1041 deals with tax payments made by the estate or trust throughout the year.
- Other Documents: The IRS provides several forms that are required for use in certain situations.
Depending on your family or the complexity of your financial situation, there might be more documents to prepare ahead of time. Marcia Campbell, a CPA in Riverside, will be able to help you with those extra documents if you need it.
How to Decide Which Form to Use When Your File Your Taxes in Riverside, CA?
When Should You File IRS Form 1041?
IRS Form 1041, U.S. Income Tax Return for Estates and Trusts, is required if the estate generates more than $600 in annual gross income. The decedent and their estate are separate taxable entities. Before filing IRS Form 1041, you will need to obtain a tax ID number for the estate. You can learn more about the filing requirements for IRS Form 1041 here and read instructions on how to file IRS Form 1041 here.
When Should You File California Form 541?
The fiduciary (or one of the fiduciaries) must file California Form 541 for a decedent’s estate if any of the following apply: Gross income for the taxable year of more than $10,000 (regardless of the amount of net income), or net income for the taxable year of more than $1,000. You can learn more about the filing requirements for California Form 541 or find the form here.
Related Article: 4 Benefits of Gifting During the Pandemic
When to Have a Trusted CPA Review Your Tax Documents?
You may want to have a CPA review your tax documents when you have either an estate or trust account. That is usually when things can get more complex and require additional documentation. The more organized you are early on, the easier it will be for your family the day that you pass.
An estate is all the property a person owns. This property includes money, a car, or a house. When a person passes away, their estate may be taxed. Estates generally have a decedent, an administrator of the estate (executor), a person who may receive property or income from the estate (beneficiary), and the property itself.
A trust is a written legal document where an assigned person (trustee) is responsible for managing money, a car, or a house for someone else (beneficiary). Trusts typically include a creator of the trust (trustor), a manager of the trust (trustee or fiduciary), a person who will receive property from the trust (beneficiary), and the property itself.
Need Help Filing Your Taxes?
There are many factors and documents that go into your taxes and if it becomes overwhelming, it may be time to get assistance. Marcia Campbell CPA has been helping people file their taxes efficiently and correctly for many years. If you are looking for a CPA in Riverside, Marcia Campbell CPA may be the right fit for you!
Contact us today by filling out a Contact Form or give our office a call at +1(951)686-3608.