Form 1041 Multiple states

Forum|Forum|1 year ago
March 25, 2025
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I prepared Form 1041 for decendent estate who resided in MA, the only income is rental real estate income from CT (Form 1065 K-1) - do I need to file both state income tax returns? File a resident form 2 for MA and a non-resident CT1041 form for CT? How do I present the income? On both tax returns and somehow get a credit on one state for taxes paid in the other state?

Thanks for the help!

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DavidD66

You are correct. Since the rental property is located in CT, the income is CT source income which requires that the estate file a CT tax return. If you are the administrator of the estate and also located in MA, then you have to file a MA return. If you are in a different state you need to check the rules for that state. Some states require that you must file a state return if the administrator is located in the state. If you are in MA, you will file a MA resident tax return and a CT non-resident tax return. Both states will tax the income and MA will give you a credit for the tax paid to CT. The credit may be less than the tax paid to CT.

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czp22Author

That helps somewhat but now I am a little more confused. I am the administrator and live in AZ. I was under the impression, since we filed for probate in MA and the deceased was a resident of MA, we needed to file MA form 2 (and CT Form 1041). The only probate asset was the partnership interest in a CT LLC that was sold without a gain.

Based on my cursory research on the AZDOR website, there does not appear to be a need to file a fiduciary AZ return as the decedent was neither a resident nor owned any AZ property. Hopefully, I am not missing anything.