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Note: This is a complicated subject. We will only
touch on some topics. We recommend that you talk these issues over
with an attorney and a CPA. We serve clients in Colorado and the
Denver Metro area.
What taxes
might be due after someone dies in Colorado?
What
income level justifies filing of a final Colorado income tax return?
What income level justifies filing
of a Colorado estate (fiduciary) income tax return?
When is the final
Colorado income tax return
due for someone who has died?
When is
the Colorado estate (fiduciary) income tax return due for someone who has died?
How much tax do you pay on
Colorado inheritance?
(Note: This discussion will only deal with Colorado taxes.
Click on this link for a discussion
of federal taxes after someone has died.)
What taxes might be due after
someone dies?
Colorado state (death) taxes do not apply after December
31, 2005. There is a possibility that Colorado Estate Tax might be
brought back sometime in the future. (This FAQ was authored 2/6/2008.
There is a possibility that this FAQ might not be kept up to date.
You are welcome to call us to check the status of this.)
Colorado individual or personal income tax. This tax would
be filed on the Colorado Form 104. The estate should pay
this tax.
Colorado estate (fiduciary) income tax. Estate (death) taxes
and estate income taxes are two different types of tax! It is very
easy and normal to confuse estate tax with estate income tax. Estate
income tax is tax on the income after a person has died. Some examples
of income would be interest, dividends, gains from sales of stock or real
estate. This tax might be paid by the estate or beneficiaries.
Most estates have to pay or file a estate income tax return(s)
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What income level
justifies filing of a final Colorado income tax return?
The person would have been either a part-time or
full-time Colorado resident; AND either
The person was required to file a federal Form 1040 or
has a Colorado income tax liability.
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What income level justifies filing
of a Colorado estate (fiduciary) income tax return?
A Colorado Fiduciary Income Tax Return (Form 105) is
required, if either a federal Fiduciary Income Tax Return (Form 1041) is
required, or, if there is Colorado fiduciary income tax due.
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When is the final
Colorado income tax return
due for someone who has died?
Simple. The final individual or personal income tax is
due on the same day if the taxpayer had not died.
Thus, if someone dies on January 1, 2011, the final Colorado Form 104
will be due on April 15th, 2012.
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When is the Colorado estate (fiduciary) income tax return due for someone who has died?
We have run into quite a few people who get incorrect advice
on this!
Lets first answer the question, "When does the first tax year
end for an estate?" The latest that it can end is the latest end of the
month such that the tax year does not exceed a year. Example, if someone
dies on June 15, 2011, the latest end of the estate tax year would be May 31,
2012.
There are some complex reasons why one might want to end the
year sooner. Ending the year sooner might result in some tax savings.
The Colorado estate (fiduciary) income tax return is due on the 15th
day of the 4th month after the end of the year. If the year ends on
December 31, 2011, the due date is April 15, 2012. If the year ends on January 31,
2012,
the due date is May 15, 2012.
Colorado Form 105, Colorado Fiduciary Income Tax Return, is
the Colorado form for estate income taxes.
How much tax do you pay
on inheritance?
This really depends on the individual circumstances.
Inheritance tax and inheritance tax rates are often misunderstood. You are
welcome to call 720-493-4804 and ask for Dave.
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US Estate Income Tax Return
US Estate Income Tax Return Instructions
Colorado Estate Income Tax Return
IRS Publication 559
The information contained here are simplifications of complex subjects. Talk to your CPA and
attorney if you want to pursue this subject more.
If you have questions about this, do not hesitate to contact us
at 720-493-4804. We primarily serve
Colorado and the Denver Metro area (we have prepared trust & estate income tax
returns outside of Colorado too). A large portion of my business is
preparing tax returns and tax planning for trusts, estates and beneficiaries of trusts
and estates.
We can answer other questions, like:
How much, if any, tax does one have to pay when they
receive an inheritance?
What costs can a trustee or personal representative
deduct? |