Who is Responsible for Paying Estate Taxes in Illinois?

In this article, we explain who is responsible for paying estate taxes in Illinois, including “when is an estate required to file an estate tax return in Illinois?”, “which assets are subject to estate tax in Illinois?”, and “who is responsible for filing an estate tax return and paying estate taxes in Illinois?”  

In Illinois, estates with a gross value of more than $4 million are required to file an estate tax return. If it’s determined that the estate owes taxes, the amount will be paid by the estate. Let’s look into more detail about estate taxes in Illinois.

When is an Estate Required to File an Estate Tax Return in Illinois?

As mentioned, the state of Illinois requires an estate valued at $4 million to file an estate tax return. This doesn’t necessarily mean the estate will owe taxes, however, as any tax deductions may reduce the amount of the taxable estate and eliminate the need to pay taxes. An estate with a value of $5.45 million or more is required to file a federal estate tax return. Because the federal estate tax exemption is higher than that of Illinois, an estate may be exempt from paying federal estate taxes but still owe the State of Illinois estate tax. Taxes, whether just for the state or for both state and federal, are due 9 months after the person’s death.

Which Assets Are Subject to Estate Tax in Illinois?

All of a deceased individual’s property and assets are part of the estate for tax purposes, regardless of whether the assets went through probate or not. These include all bank accounts and certificates of deposit, retirement account funds, stocks, bonds and other investment accounts, proceeds from life insurance policies, any real estate owned in Illinois, vehicles and other personal property, and interests owned in a business.

Who is Responsible for Filing an Estate Tax Return and Paying Estate Tax in Illinois

The executor’s responsibility is to add up the value of the all the assets left behind by the decedent. Due to the large nature of the estates required to file state and federal tax returns, preparing the returns is intensive work that should be done by an experienced tax attorney or CPA. The work can cost up to several thousand dollars, and fees are to be paid by estate funds, not by the executor or beneficiaries of the estate.

Conclusion

The total value of the estate determines whether an estate must file a tax return with the state or federal and how much the estate will owe in taxes. Any tax owed will be paid by the estate and must be paid within 9 months after the decedent’s death. Heirs, beneficiaries and the personal representative do not have the responsibility in paying estate taxes. The executor will sign the check on behalf of the estate if taxes are due, but does not personally pay the taxes.