Taxes and Tax Returns When Someone Dies In Colorado -- Frequently Asked Questions

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David M. Kaufmann, CPA

Voice: 720.493.4804

Email: contact2@kaufmann-cpa.com

Physical Address:

2831 Wyecliff Way
Highlands Ranch, CO 80126

Mailing Address:

PO Box 632285
Highlands Ranch, CO 801
63-2285

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. Reporting of foreign gifts or inheritances.)
 

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 10/14/2014.  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?

  1. The person would have been either a part-time or full-time Colorado resident; AND either

  2. 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, 2015, the final Colorado Form 104 will be due on April 15th, 2016.

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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, 2015, the latest end of the estate tax year would be May 31, 2016.

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, 2015, the due date is April 15, 2016.  If the year ends on January 31, 2015, the due date is May 15, 2015.

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?