Over the course of administering an estate, many different types of expenses can arise. The good news for the beneficiaries of the estate is that these expenses may be deductible. It is important to consult with an experienced tax advisor and attorney who understand which types of expenses qualify to be used for this tax benefit.
4 Types of Expenses That May Be Deducted By an Estate
When deducting expenses, the personal representative of the estate can elect to either take this deduction against the gross estate for determining the federal estate tax or from the estate’s gross income when calculating the estate’s income tax. The expenses cannot, however, be deducted for both estate and income tax purposes at the same time. The following is an overview of the types of expenses that can generally be deducted by an estate:
- Fees paid to the personal representative for administering the estate.
- Fees paid to attorneys, accountants, and tax preparers with regard to estate administration.
- Expenses associated with the management, conservation, or maintenance of estate property.
- Expenses incurred in connection with the determination, collection, or refund of the estate’s tax liability.
Estates have various types of tax liabilities that every personal representative must be aware of. It’s important to understand how to use deductions in the best possible manner in order to minimize the estate’s overall tax liability. Fortunately, you do not have to figure out these complicated issues on your own. We are here to help. We encourage you to contact us today at (714) 459-5481 for more information.