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Wisconsin Department of Revenue

 Estates and Fiduciaries

  1. What Wisconsin tax returns are required for a deceased taxpayer?
  2. Where do I file the estate's Wisconsin returns?
  3. What are the deadlines for filing the estate's Wisconsin returns?
  4. What extensions are available if I can't file the estate's Wisconsin returns by the due date?
  5. What are the most common mistakes regarding the Wisconsin estate tax return?
  6. How do I get a Closing Certificate for Fiduciaries?
  7. What are the most common errors in completing the Wisconsin fiduciary return?
  8. What trusts must file Wisconsin fiduciary returns?
  9. Where do I file a trust's fiduciary return?
  10. I received an inheritance from my aunt. Do I have to report it as income on my income tax return?

  1. What Wisconsin tax returns are required for a deceased taxpayer?

    More than one type of tax return may be required for deceased taxpayers, such as:

    Wisconsin Individual Income Tax Return

    A personal representative or petitioner must file an individual income tax return, Form 1, 1A, 1NPR, or WI-Z, for a decedent from the beginning of the year to the date of death. The due date of the individual return is April 15th of the year following death. The personal representative is also responsible for filing returns for any prior years for which the decedent had a filing requirement and did not file a return.

    The filing requirements for tax years beginning in 2007 are as follows:

    • Single person
      1. Under age 65 - gross income of $9,490 or more
      2. Age 65 or older - gross income of $9,740 or more
    • Married persons filing jointly - gross income of $18,000 or more
    • Married person filing separately - gross income of $9,000 or more (each spouse)
    • Head of household
      1. Under age 65 - gross income of $12,050 or more
      2. Age 65 or older - gross income of $12,300 or more
    • Part-year resident or nonresident - gross Wisconsin income of $2,000 or more

    If you are a surviving heir and you are claiming a refund on behalf of a person who died and the refund is larger than $100, attach a completed Form I-804, Claim for Decedent's Wisconsin Income Tax Refund, to the front of Form 1. If the refund is $100 or less, attach a note to the front of Form 1. List your name, address, social security number, relationship to the person who died, and sign the note.

If you are the personal representative for the decedent's estate, attach a copy of the domiciliary letter to the return in lieu of the Form I-804. The decedent's refund will be issued to you as the personal representative.

The person who files the return should enter the appropriate code in the Special Conditions box. See the instructions for Form 1, 1A or WI-Z. If the taxpayer did not have to file a return but paid estimated tax or had tax withheld, a return must be filed to get a refund.

If your spouse died during 2007 and you did not remarry in 2007, you can file a joint return. You can also file a joint return for 2007 if your spouse died in 2008 before filing a 2007 return. A joint return should show your spouse's 2007 income before death and your income for all of 2007. Write "Filing as surviving spouse" in the area where you sign the return. If someone else is the personal representative, he or she must also sign.

If you are claiming a refund as a surviving spouse filing a joint return with the deceased and you follow the above instructions, you do not have to file the Form I-804.

Wisconsin Fiduciary Income Tax Return(s)

Every personal representative or special administrator of an estate of a Wisconsin decedent must file a Wisconsin fiduciary income tax return, Form 2, if the gross income of the estate is $600 or more. Nonresident estates must file Wisconsin fiduciary returns if they have gross income of $600 or more from Wisconsin sources. Gross income means all income, before deducting expenses, reportable to Wisconsin which is received in the form of money, property, or services. It does not include items which are exempt from Wisconsin tax.

Resident Estate. The estate is considered a resident of the state in which the decedent was domiciled at the time of death. Use Form 2 to file an income tax return and pay the tax due if the estate has gross income of $600 or more for the taxable year.

Nonresident Estate. Use Form 2 to file an income tax return and pay the tax due if (a) there is income or gain derived from Wisconsin sources, and (b) a federal fiduciary return is required to be filed with the Internal Revenue Service. Income from sources within Wisconsin includes income or gain from:

The first fiduciary income tax return filed by a personal representative or petitioner of an estate covers the period from the date of death of the decedent to the end of the first year selected by the fiduciary. The taxable year cannot be longer than 12 months, must end on the last day of the month, and must coincide with the year selected for filing the federal return. The return is due on the 15th day of the 4th month after the close of the taxable year of the estate.

Wisconsin Estate Tax Return

Wisconsin estate tax is imposed because of a death or gift in contemplation of death on property or a transfer of property. In addition, the tax is imposed upon any transfer of property to any distributee in either of the following cases: (a) when the transfer is from a person who dies while a resident of Wisconsin at death, or (b) when the transfer is of property within the jurisdiction of Wisconsin and the decedent was not a resident of Wisconsin at death. The Wisconsin estate tax is a tax based on the Federal State Death Tax Credit. This tax is imposed upon both resident and nonresident decedents dying on or after January 1, 1992. The federal filing requirements are based on the gross estate and are as follows:

1992 - 1997 $600,000
1998 $625,000
1999 $650,000
2000 - 2001 $675,000
2002 - 2003 $1,000,000
2004 - 2005 $1,500,000
2006 - 2007 $2,000,000

For deaths occurring on January 1, 2002, through September 30, 2002, the Wisconsin filing requirement is $1,000,000.

For deaths occurring on or after October 1, 2002, through December 31, 2007, the Wisconsin taxable estate is based on the federal taxable estate as computed under the federal estate tax law in effect on the day of the decedent's death. The federal estate tax credit allowed for state death taxes shall be computed under the federal estate law in effect on December 31, 2000.

For deaths occurring on or after January 1, 2008, the federal credit for state death taxes and the federal estate tax shall be computed under the federal estate tax law in effect on the date of the decedent's death.

Note: This means that the requirement for filing a Wisconsin estate tax return, Form W706, was $1,000,000 for deaths occurring from January 1, 2002, through September 30, 2002, and then went back to $675,000 for deaths occurring from October 1, 2002, through December 31, 2007. Therefore, the Wisconsin filing requirement is different from the federal requirement, which is $2,000,000 in 2007. If the decedent's gross estate is more than $675,000 for a death occurring between October 1, 2002, and December 31, 2007, a Wisconsin estate tax return must be filed even if no federal estate tax return is required. The Wisconsin filing requirements are based on the gross estate and are as follows:

1992 - 1997 $600,000
1998 $625,000
1999 $650,000
2000 - 2001 $675,000
1/1/02 - 9/30/02 $1,000,000
10/1/02 - 12/31/07 $675,000
1/1/08 - 12/31/10 No Wisconsin
Estate Tax
2011 $1,000,000

Forms and instructions for filing the Wisconsin estate tax returns are available on this website.

The Wisconsin Form W706 should be filed by the person who is or would be responsible for filing the federal estate tax return (personal representative, special administrator, trustee, distributee, or other person signing the federal Form 706).

The Form W706 is due 9 months after the date of death or when the federal estate tax return is required to be filed, as extended, whichever is later. If you are not required to file a federal estate tax return, you can obtain an extension for filing the Form W706 by submitting Form W4768, Application for Extension of Time to File a Wisconsin Estate Tax Return. The extension period is six months. However, regardless of when the return is filed, the tax is due 9 months after the date of death. A return is required to be filed if the gross estate exceeds $675,000 even if no tax is due.

If the tax is not paid within 9 months of the decedent's death, interest is imposed at 1% per month from the date of death. There is no extension available for payment of the Wisconsin estate tax.

If the return is filed after the due date, there is a penalty equal to 5% of the tax. The minimum penalty is $25 and the maximum penalty is $500.

Examples:

Tax Interest Total Amount Due
$1,200 (1% x 9½ months) $114 $1,314

Certificate Determining Estate Tax

After reviewing the Wisconsin estate tax return, the Department of Revenue will issue a Certificate Determining Estate Tax. If the IRS increases or decreases the federal estate tax, the person entitled to the refund or liable for the additional tax is required to notify the Department within 30 days.

Wisconsin Inheritance Tax Return

There is no Wisconsin inheritance tax for decedents dying on or after January 1, 1992. If death occurred prior to January 1, 1992, see the Estate, Inheritance and Gift Tax Forms or contact the Department of Revenue at (608) 266-2772 to obtain the appropriate forms.

  1. Where do I file the estate's Wisconsin returns?

    Send the final individual income tax return to:

    If tax is due:
    P.O. Box 268
    Madison, WI 53790-0001

    If a refund or no tax is due:
    P.O. Box 59
    Madison, WI 53785-0001

Send your Wisconsin estate tax return, Form W706, to:

Wisconsin Department of Revenue
P.O. Box 8904, Mail Stop 5-144
Madison, WI 53708-8904

Send your Form 2, fiduciary income tax return to:

If tax due or with a request for a closing certificate for fiduciaries:

Wisconsin Department of Revenue
P.O. Box 8918
Madison, WI 53708-8918

All other Form 2, fiduciary income tax returns :

Wisconsin Department of Revenue
P.O. Box 8955
Madison, WI 53708-8955

  1. What are the deadlines for filing the estate's Wisconsin returns?

    A final individual income tax return for calendar year 2007 is due April 15, 2008.

    A Wisconsin fiduciary income tax return, Form 2, for an estate for 2007 is due on or before April 15, 2008, for a calendar year filer or 3 1/2 months after the close of the taxable year for a fiscal year filer.

    The Wisconsin estate tax return, Form W706, is due 9 months after the date of death or when the federal estate tax return, Form 706, is required to be filed, as extended, whichever is later. If you are not required to file a federal estate tax return, you can obtain an extension for filing the Form W706 by submitting Form W4768, Application for Extension of Time to File a Wisconsin Estate Tax Return. The extension period is 6 months. However, regardless of when the return is filed, the Wisconsin estate tax is due 9 months after date of death.

    A return is considered filed by the due date if:

    Returns filed using the U.S. Postal Service:

    • The return is mailed in a properly addressed envelope with the postage duly prepaid,
    • The envelope containing the return is postmarked on or before the due date, and
    • The return is received by the Department within 5 days of the due date.

    Returns filed using alternate delivery services (UPS, FedEx, etc.):

    • The return must be received by the Department by the due date.

  2. What extensions are available if I can't file the estate's Wisconsin returns by the due date?

    The following extension of time to file options are available for tax returns:

    Individual

    If you have an extension for filing your federal income tax return, this automatically gives you a Wisconsin extension provided you:

    • Estimate your 2007 tax and remit this amount by the due date using 2007 Wisconsin Form 1-ES, and
    • Attach a copy of your federal extension application to your Form 1.

    Extensions available under federal law may be used for Wisconsin purposes, even if you do not need a federal extension because you filed your 2007 federal return by April 15, 2008. To obtain an extension only for Wisconsin, you must attach a statement to your Wisconsin income tax return indicating you wish to take the federal Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return, extension provision or attach a copy of the federal Form 4868 with only the name, address, and signature areas completed.

    Fiduciary

    Extensions available under federal law may be used for Wisconsin fiduciary income tax extensions, even if you do not need a federal extension because you file your federal return by the due date. To obtain an extension only for Wisconsin, you must:

    • Estimate your 2007 Wisconsin income tax and pay the amount you will owe by the due date (see the information for individuals above), and
    • Attach a statement to your Form 2 indicating which federal extension provision you are using (for example, automatic 3-month extension) or attach a copy of the appropriate federal extension application form with only the name, address, and signature areas completed.

    No extension is allowed if your estimate of tax is not reasonable.

    Note: Even though you may have an extension of time to file your return, you will owe interest on any tax not paid by the due date. Returns not filed by the original due date, or during an extension period, are subject to additional interest and penalties.

    Estate

If you have a federal filing requirement, the Wisconsin estate tax return, Form W706, is due at the same time that the federal estate tax return is due to be filed. If the IRS grants an extension to file the federal Form 706, it automatically applies for Wisconsin, provided you submit a copy of the approved federal extension.

If you request a federal extension of time to file the Form 706 and there will be estate tax due, you should notify the Department of Revenue and pay the estimated Wisconsin estate tax on Form 401T.

The Wisconsin estate tax return is due 9 months after the date of death of the decedent. If no federal estate tax return will be filed, a Wisconsin only extension, Form W4768, should be filed. If there will be a Wisconsin estate tax due, you should pay the estimated Wisconsin estate tax on Form 401T.

Estate tax not paid within 9 months of the date of death is charged interest at 12% per year from the date of death to the date of payment.

  1. What are the most common mistakes regarding the Wisconsin estate tax return?

Listed below are errors that are commonly made regarding Wisconsin estate taxes and the filing of a Wisconsin estate tax return, Form W706. This information may be helpful in preparing proper and timely estate tax returns and related documents.

  1. How do I get a Closing Certificate for Fiduciaries?

You can request a Closing Certificate for Fiduciaries from the Wisconsin Department of Revenue at the time that the Form 2, fiduciary income tax return, is filed for the year prior to the final year.

Section 71.13(2), Wis. Stats., provides that the Department may issue a Closing Certificate for Fiduciaries to a personal representative or trustee in order to obtain the court's approval for final distribution and discharge of the fiduciary. The Department will issue the Closing Certificate for Fiduciaries only in cases where the court has required it to close a proceeding.

Trusts

Complete Schedule CC and attach copies of the trust instrument and any amendments, a statement as to why the trust is closing, copies of the annual court accountings for the previous 3 years, and the petition to the court to close the trust.

Mail the certificate request to:

Wisconsin Department of Revenue
P.O. Box 8918
Madison, WI 53708-8918

Estates

Complete Schedule CC and attach copies of the inventory and will including any codicils with the request. If these documents were previously submitted with a Wisconsin Estate Tax Return, it is not necessary to submit them again.

The receipt of the Closing Certificate for Fiduciaries will not relieve the fiduciary from the responsibility of filing the final fiduciary return.

Note: If an estate does not have enough income to require filing and needs a Closing Certificate for Fiduciaries, or if the estate will be filing only one fiduciary return when the estate is closed and needs the closing certificate before filing the return, use the following procedures:

Wisconsin Department of Revenue
P.O. Box 8918
Madison, WI 53708-8918

  1. What are the most common errors in completing the Wisconsin fiduciary return?

Listed below are facts and tips summarized in a check list to help you in completing a fiduciary income tax return. These are the most common reasons for delays in approving and issuing Closing Certificates for Fiduciaries.

Form 2: Filling Out the Fiduciary Income Tax Return (Estates and/or Trusts) Correctly and Completely

Do Not:

Reminder:

A Closing Certificate for Fiduciaries may be requested from the Wisconsin Department of Revenue at the time that the fiduciary income tax return is filed for the year prior to the final year of the estate or trust.

  1. What trusts must file Wisconsin fiduciary returns?
    • A Wisconsin trust must file a Wisconsin fiduciary return if it has (a) any taxable income for the taxable year, or (b) gross income of $600 or more, regardless of the taxable income.

      Gross income means all income, before deducting expenses, reportable to Wisconsin which is received in the form of money, property, or services. It does not include items which are exempt from Wisconsin tax.

      Example: A trust has $400 of interest income. It makes no distributions and therefore only has an exemption of $100, which would result in taxable income of $300.

    • A nonresident trust must file a Wisconsin fiduciary return if it has (a) any Wisconsin taxable income for the year, or (b) gross income from Wisconsin sources of $600 or more, regardless of the taxable income.

      Wisconsin source income includes income or gain from:

      1. Real or tangible personal property located in Wisconsin.
      2. A business, trade, profession, or occupation carried on within Wisconsin, including a corporation taxed under Subchapter S of the Internal Revenue Code.
      3. Personal or professional services performed in Wisconsin either as an individual or as a member of a partnership or limited liability company
      4. income received from the Wisconsin state lottery or a multijurisdictional lottery if the winning lottery ticket or lottery share was purchased from a Wisconsin retailer.

    • If a qualified funeral trust makes the election under Internal Revenue Code section 685 for federal income tax purposes, that election applies for Wisconsin income tax purposes.
    • Electing small business trusts (ESBTs) may be S corporation shareholders. The portion of an ESBT that consists of stock of one or more S corporations is treated as a separate trust. The separate trust is subject to Wisconsin income tax at the highest rate.

    Resident Trust

    A trust created by a decedent's will (testamentary trust) is resident at the domicile of the decedent at the time of the decedent's death, unless transferred by a court having jurisdiction to another court's jurisdiction.

    Inter vivos trusts that are made irrevocable and were administered in Wisconsin before October 29, 1999, shall be considered resident at the place where the trust is being administered.

    The following inter vivos trusts that become irrevocable on or after October 29, 1999, or that became irrevocable before October 29, 1999, and are first administered in Wisconsin on or after October 29, 1999, are resident of Wisconsin:

    • Trusts, or portions of trusts, the assets of which consist of property placed in the trust by a person who is a resident of Wisconsin at the time that the property was placed in the trust if, at the time that the assets were placed in the trust, the trust was irrevocable.
    • Trusts, or portions of trusts, the assets of which consist of property placed in the trust by a person who is a resident of Wisconsin at the time that the trust became irrevocable if, at the time that the property was placed in the trust, the trust was revocable.

    A trust is revocable if the person whose property constitutes the trust may revest title to the property in that person.

    A trust is irrevocable if the power to revest title does not exist.

    Examples:

    Law prior to October 29, 1999:

    • John Doe, a resident of Wisconsin, set up an irrevocable trust on October 22, 1999, in Wisconsin that is to be administered in Wisconsin. The trust will be taxable to Wisconsin.
    • Jack Doe, a resident of Wisconsin, set up an irrevocable trust on October 22, 1999, in Florida that is to be administered in Florida. The trust will not be taxable to Wisconsin.
    • Mary Doe, a resident of Florida, set up an irrevocable trust on October 22, 1999, in Wisconsin that is to be administered in Wisconsin. The trust will be taxable to Wisconsin.
    • James Taxpayer, a resident of Wisconsin, set up a grantor (revocable) trust in Arkansas that is to be administered in Arkansas. The trust became irrevocable at his death on October 22, 1999. James was a Wisconsin resident at death. This trust will not be subject to Wisconsin income tax.
    • Susan Taxpayer, a resident of Wisconsin, has an irrevocable trust that is administered in Florida. On October 22, 1999, she made an irrevocable gift to the trust of her company stock. The earnings on the stock, if taxable at the trust level, would not be taxable to Wisconsin.
    • Martha Doe, a resident of Wisconsin, set up an irrevocable trust administered in Wisconsin in 1997. Martha moved to Florida on October 22, 1999, established Florida residency, and moved her trust to Florida. The trust would no longer be taxable to Wisconsin as the trust would now be administered in Florida.

    Law change effective on October 29, 1999:

    • John Doe, a resident of Wisconsin, set up an irrevocable trust on December 15, 1999, in Wisconsin that is to be administered in Wisconsin. The trust will be taxable to Wisconsin.
    • Jack Doe, a resident of Wisconsin, set up an irrevocable trust on December 15, 2005, in Florida that is to be administered in Florida. The trust will be taxable to Wisconsin. The trust will continue to be taxable to Wisconsin even if Jack Doe changes his domicile to another state.
    • Mary Doe, a resident of Florida, set up an irrevocable trust on December 15, 2005, in Wisconsin to be administered in Wisconsin. The trust would not be taxable to Wisconsin since Mary Doe was not a Wisconsin resident at the time the trust became irrevocable.
    • James Taxpayer, a resident of Wisconsin, set up a grantor (revocable trust) in Arkansas that is administered in Arkansas. The trust became irrevocable on James's death on December 15, 2005; James was a Wisconsin resident at the time of death. The trust would be taxable to Wisconsin.
    • Susan Taxpayer, a resident of Wisconsin, has an irrevocable trust that has been administered in Florida since 1998. On December 15, 2005, she made an irrevocable gift to the trust of $2 million of her company stock. The value of the assets in the trust are $1.5 million before the gift and $3.5 million after. All income from the $2 million which was placed in the trust on December 15, 2005, will be taxable to Wisconsin. The assets put into the trust prior to October 29, 1999, will not be taxable to Wisconsin.
    • Martha Doe, a resident of Wisconsin, set up an irrevocable trust in Wisconsin on December 15, 1999. In March 2005, Martha moved to Florida and became a Florida resident. The trust would remain taxable to Wisconsin since Martha Doe was a resident of Wisconsin at the time the trust became irrevocable.

    Effectively, this law change subjects any and all trusts and contributions to trusts by a Wisconsin resident that become irrevocable on or after October 29, 1999, to Wisconsin income tax while exempting all irrevocable trusts of a nonresident being administered in Wisconsin from Wisconsin income tax.

  1. Where do I file a trust's fiduciary return?

If making a payment or filing with a request for a Fiduciary Closing Certificate, mail the return to:

Wisconsin Department of Revenue
P.O. Box 8918
Madison, WI 53708-8918

Mail all other trust returns to:

Wisconsin Department of Revenue
P.O. Box 8955
Madison, WI 53708-8955

  1. I received an inheritance from my aunt. Do I have to report it as income on my income tax return?

An inheritance is generally not subject to income tax since the deceased has already paid income tax on the money.

Any income earned after your aunt's death would be taxable to the estate. If the inheritance or part of the inheritance is subject to income tax, you will receive a form (usually a Schedule K-1) from the estate telling you how much income to report and where to report it on your federal and state income tax returns.

Examples of inherited property not subject to income tax are stock, bank accounts, life insurance proceeds, and real estate.

Examples of inherited property that may be subject to income tax are individual retirement accounts (IRAs), dividends paid on stock, interest paid on bank accounts, or installment payments on a land contract received after your aunt's death.

FOR MORE INFORMATION PLEASE CONTACT:

WISCONSIN DEPARTMENT OF REVENUE
Estate and Fiduciary Assistance
Mail Stop 5-144
P.O. Box 8906
Madison, WI 53708-8906
Phone: (608) 266-2772
Fax: (608) 267-0834
E-Mail Additional Questions

Last updated January 2, 2008