Income Tax and Estate Tax Question

It is my understanding that quarterly income taxes are consssidered a prepayment of the estimated tax due for that calendar year. Estate tax would be due on total asset value at the point in time of death. There is no connection between income and estate tax. A refund is simply an overpayment of income tax, and should be considered as part of the estate valuation. An amended return may be necessary.

The income tax year for the decedent ends upon the date of death, and an oncome tax return should be prepared for the portion of hte year he was alive. There will be one of three conditions, the estimated taxes are greater than the tax liability in which case there is an asset reported on the estate tax return (Form 706), the estimated payments exactly equal the tax liability in which case nothing is reported on the Form 706, or the estimated payment are less than the tax liability in which case a liability is reported on the Form 706.

It can get confusing if the decedent has a surviving spouse since the widow(er) is entitled to file a joint return as surviving spouse for the year of death. All post-death income of the decedent is supposed to be reported on a Form 1041 estate tax return rather than the fiinal Form 1040. There can be significant deductions for income received with respect to the decedent that was taxed on the Form 706 as an asset.