Are estimated tax payments necessary for estates or trusts?
In general, a fiduciary for an estate or trust must file quarterly estimated payments if the estate or trust is expected to owe more than $500 for the current year return after crediting amounts paid through withholding and all other credits. If the estate or trust owes more than $500, estimated payments may not have to be made if the estate or trust expects the withholding to be at least:
- 90 percent of your current year's tax liability
- 100 percent of the previous year’s tax liability, or
- 110 percent of the previous year's tax liability if the estate’s or trust’s previous year’s taxable income is more than $150,000.
If estimated payments are required, use the Estimated Income Tax Voucher for Fiduciary and Composite Filers (Form MI-1041ES). Filing instructions are with the form. Do not use MI-1040ES to make estimated payments for an estate or trust. If an estate owes more than $500, estimated payments are not required if the decedent died within the last two years. If a fiduciary fails to make required estimated payments, pays late, or underpays, Treasury may charge penalty and interest. Penalty is 25 percent of the tax due (with a minimum of $25) for failing to file estimated payments, or 10 percent (with a minimum of $10) for underpaying estimated payments. Interest is 1 percent above the prime rate and is computed monthly. The rate is adjusted on July 1 and January 1.