An estate tax return in Maryland is a return that is due nine months from the date of death for both Maryland and the federal government. The Maryland estate tax uses the federal form, so for the state of Maryland estate tax return, might not need to file the federal 706 form.
The estate tax return in Maryland includes schedules that lists out all of the assets of the decedent. What is commonly misunderstood is that the Maryland and the federal taxable estate generally includes the totality of an individual’s assets in their controls regardless of how the account or the asset is titled or the beneficiary designation.
That differs significantly from the probate estate. The probate estate will only include assets of the individual’s sole name with no beneficiary designation or joint owner. This is one of the ways that estates can become a liquid, meaning an individual can have a high amount of assets that they leave on their beneficiary designation. Those assets will all be subject to the estate tax and if an estate tax is due, there may no longer be adequate assets in the estate to pay the estate taxes required. An experienced estate planning lawyer in Maryland can further answer any inquiries relating to estate taxes.
Submission Deadline for Estate Tax Documentation
The Maryland and Federal Estate returns are required to be filed nine months from the date of death, but income taxes return are different. From January 1st to the date of the decedent’s death, that income tax return is due the following April 15th, just as the decedent had survived. If an individual dies on February 23rd 2017, all incomes from January 1st to February 23rd 2017 would be reflected on a final income tax return that would be due April 15th, 2018.
After the date of death, the income is reported on a fiduciary income tax return, and that due date is often dependent on whether or not there is an estate irrevocable living trust or other trusts that is reporting income taxes. Generally, fiduciary income tax returns are due in a period not to exceed the 30th day of the 11th month following the decedent’s death.
For example, if a decedent died on February 23rd, the closure of the accounting period would be January 31st and then that tax return would be due three and a half months from that date. It would be May 15th, but generally, the periods for income tax returns, the accountant will adjust the period so that the outcome of the income taxes is more favorable. While a return has to be filed, the period can be shortened or abbreviated to assist with the payment of income taxes.
Assets Included in the Estate Tax Return
The estate tax includes all assets in the decedent’s control, on the date of death regardless of beneficiary designation or joint ownership. Real estate, meaning all bank accounts, all brokerage accounts, life insurance, retirement accounts, collection, vehicles, jewelry, annuities, basically business interests, any assets in the decedent’s control on the date of death will be included in the estate tax.
To provide the value of those assets, all of those assets would be valued as of the date of death and that market valuation is based on the federal regulations.
The assets are valued as of the date of death depending on the nature of the assets. The federal regulations provide how the assets should be valued.
When Estate Tax Return Are Due
An estate tax return is due nine months from the date of death. It is possible to request an automatic six months extension to file the estate tax return, but the extension does not provide for an extension to pay the taxes.
Other Documents Submitted with the Estate Tax Return
All supporting documentation to reflect the fair market value of the assets of the estate is attached to the estate tax return. In addition, the last will and testament, if any, like death certificate and revocable living trust documents, are also attached.
A Personal Representative may wish to consult with a tax adviser to determine what other returns may be required.