If you’re handling an estate in Idaho and the deceased person had income after they passed like rental payments, investment dividends, or unpaid wages you’ll likely need to file a final tax return for the estate. This isn’t the same as the decedent’s last personal income tax return. It’s a separate filing for income the estate itself earned between the date of death and when assets were distributed or the estate closed.

What is an Idaho final tax return for estates?

An Idaho final tax return for estates (Form 40, with Schedule E) reports income the estate received while it was still open such as interest from a savings account held in the estate’s name, gains from selling stocks, or rent collected on inherited property. The estate is treated as its own taxpayer during this time. You file it only once, at the end of the estate’s administration, after all debts are paid and before remaining assets go to heirs.

When do you need to file one?

You must file if the estate had more than $1,000 in gross income during the tax year or if it was required to file a federal Form 1041. Most estates with any active bank accounts, brokerage holdings, or rental properties will meet this threshold. For example: An estate collects $1,200 in CD interest over eight months before closing. That triggers the requirement. But if the executor immediately liquidates accounts and distributes cash without earning income, a return may not be needed.

Who files it and what forms are involved?

The personal representative (executor or administrator) signs and submits the return. In Idaho, you’ll use Form 40 (Idaho Individual Income Tax Return) with Schedule E (Estate and Trust Income). You’ll also need the federal Form 1041 and its K-1s if beneficiaries received taxable distributions. A full list of required forms including where to find instructions and deadlines is available in our Idaho estate settlement tax forms list.

Common mistakes people make

  • Filing the estate’s return using the decedent’s Social Security number instead of the estate’s EIN (which you must apply for first)
  • Mixing up the estate’s income with the decedent’s final individual return especially with retirement account distributions or deferred compensation
  • Forgetting to report income earned after death but paid to the estate later (e.g., a bonus check mailed two months after the person died)
  • Assuming no return is needed just because the estate didn’t earn much remember, $1,000 is the threshold, not zero

How does this fit with probate and other tax steps?

Filing the final estate return is one part of broader tax compliance during estate settlement. It usually happens after probate is well underway but before closing the estate. You’ll want to coordinate it with other deadlines like filing the federal Form 1041, paying any estate-level tax, and issuing K-1s to beneficiaries. Our probate tax compliance steps guide walks through that timing in plain language.

Do you need to file even if the estate owes no tax?

Yes if the income threshold is met, you must file even if the return shows zero tax due. Idaho doesn’t waive the filing requirement based on low income or no balance owed. This is different from some states, so don’t assume Idaho follows the same rule.

Where to start next

First, confirm whether your estate meets the $1,000 income threshold. Gather bank statements, brokerage summaries, lease agreements, and any 1099s issued to the estate’s EIN. Then review the Idaho final tax return for estates checklist to make sure you haven’t missed key steps like applying for an EIN or tracking deductible expenses (e.g., attorney fees tied to income-producing activity). If the estate held real estate or complex investments, consider consulting a CPA familiar with Idaho’s rules the Idaho Tax Commission’s 2023 Form 40 booklet has examples and line-by-line instructions.

Next step: Download and print the Idaho estate tax filing requirements checklist to verify whether your situation calls for a final return and whether any other filings (like inheritance disclosures or federal estate tax) also apply.