Managing an estate is already a complex process, but when it involves multiple states, it becomes even more challenging. Each state has its own estate tax rules, filing requirements, and exemptions. Whether you’re an executor, trustee, or beneficiary, understanding estate tax return preparation and filing across states is crucial to ensure compliance and avoid costly penalties.
At Paracha Accounting, we specialize in helping clients navigate the complexities of multi-state estate tax returns with precision and care. We will explain how estate taxes work, what makes multi-state filing complex, and why hiring experienced professionals like us can save you time, money, and stress.
What Is Estate Tax Return Preparation and Filing?
Estate tax return preparation and filing is the process of reporting the value of a deceased person’s estate to federal and state tax authorities. The estate tax, often called the “death tax,” applies to the transfer of assets, including real estate, investments, and other property — from a deceased person to their heirs or beneficiaries.
While the federal estate tax is governed by the IRS, individual states can impose their own estate or inheritance taxes. That’s where things get tricky, especially when assets are located in multiple states.
Why Multi-State Estate Tax Filing Is Complicated
Estate tax filing becomes complex when a person owns property or assets in more than one state. This creates what’s known as a multi-jurisdictional tax obligation.
Each state may have:
- Different tax exemption thresholds
- Varying filing deadlines
- Unique estate valuation rules
- Separate inheritance tax systems
For example, a person living in Texas (which has no state estate tax) may own property in New York (which does). In that case, the executor must file an estate tax return in New York for that property in addition to the federal estate tax return.
That’s why professional assistance in estate tax return preparation and filing across states is essential especially if the estate spans multiple jurisdictions.
Federal vs. State Estate Taxes
- Federal Estate Tax
The IRS Form 706 is used to file the federal estate tax return. For 2025, the federal exemption threshold is over $13 million, meaning only estates exceeding that amount are taxed.
- State Estate and Inheritance Taxes
Currently, about a dozen states plus the District of Columbia have their own estate taxes, including:
- New York
- New Jersey
- Massachusetts
- Oregon
- Washington
- Connecticut
- Maryland
Other states like Iowa, Kentucky, and Nebraska impose inheritance taxes, which are paid by the recipients of the inheritance rather than the estate itself.
Understanding these differences is key to compliant and accurate estate tax return preparation and filing across states.
How Paracha Accounting Handles Multi-State Estate Tax Filings
At Paracha Accounting, we take a detailed and structured approach to managing complex estate filings:
Comprehensive Estate Valuation
We begin by determining the total value of the estate, including real estate, bank accounts, stocks, retirement funds, and business interests — across all states where assets are held.
Identifying State Filing Requirements
Our experienced CPAs analyze which states require separate filings and calculate their respective exemption limits and tax rates.
Coordinating with Legal and Financial Advisors
We collaborate with estate attorneys, financial planners, and beneficiaries to ensure all documents align with state and federal tax requirements.
Preparing and Filing Returns
We handle all aspects of estate tax return preparation and filing across states, ensuring each jurisdiction receives accurate and timely submissions.
Minimizing Tax Liabilities
Through strategic planning, we help reduce the estate’s overall tax burden by applying credits, deductions, and valuation discounts where applicable.
When Do You Need to File Multi-State Estate Taxes?
You may need to file estate taxes in multiple states if:
- The deceased owned property in more than one state.
- The deceased was domiciled in one state but held assets elsewhere.
- The estate generates income from out-of-state investments or trusts.
- Beneficiaries live in states that impose inheritance taxes.
Each of these scenarios requires detailed review and accurate filing to prevent double taxation or legal disputes.
Common Challenges in Estate Tax Return Preparation and Filing Across States
Filing estate taxes across different jurisdictions can lead to confusion and errors. Here are some common challenges:
- Conflicting State Laws
Each state defines taxable property differently, leading to inconsistencies in valuation.
- Differing Exemption Limits
While one state may exempt estates under $2 million, another may tax any estate above $1 million.
- Overlapping Filing Deadlines
Coordinating federal and state filing timelines can be difficult, especially when multiple states are involved.
- Estate Residency Issues
Determining the decedent’s domicile (legal residence) can be complicated when multiple properties are owned in different states.
- Complex Documentation
Multi-state filings often require numerous supporting documents, deeds, appraisals, death certificates, and more, all of which must be accurate and complete.
At Paracha Accounting, our experts simplify these challenges by managing every aspect of multi-state estate tax preparation from start to finish.
Benefits of Working with Paracha Accounting
Choosing Paracha Accounting for estate tax return preparation and filing across states ensures:
Nationwide Expertise
Our CPAs are experienced with estate laws in multiple states, providing complete nationwide support.
Compliance and Accuracy
We handle all filings meticulously, ensuring 100% compliance with IRS and state tax authorities.
Time and Stress Reduction
We streamline the entire process so you can focus on managing the estate, not paperwork.
Minimized Tax Liability
Our strategic tax planning helps protect the estate’s value and reduce tax exposure.
How to Get Started with Paracha Accounting
Getting started with Paracha Accounting is simple:
- Schedule a Consultation: We’ll assess your estate’s structure and filing needs.
- Review the Estate Assets: Our team collects information about properties and assets in all states involved.
- Prepare and File Returns: We prepare accurate federal and state returns and file them promptly.
- Post-Filing Support: We offer ongoing support for audits, amendments, or future estate planning.
With Paracha Accounting by your side, multi-state estate tax filings are handled professionally and seamlessly.
Conclusion
Dealing with estate tax return preparation and filing across states can be overwhelming, but you don’t have to do it alone. With experienced professionals like Paracha Accounting, you get the expertise, compliance, and peace of mind your family deserves.
Our team ensures that every aspect of your estate, from asset valuation to state-specific filings, is managed with precision and care. We help you protect your legacy while staying compliant with all federal and state tax laws.