Business Tax Returns During Probate Process

[MomAdvisor]

Connecticut

My question/scenario is a bit complex. I will try to be as concise as possible. A husband and wife (both second marriages for each) own a business together (husband 98% owner of business, wife 1% owner and stepson - son of wife - 1% owner). The husband dies unexpectedly, the wife is not listed in the will (will filed prior to this current marriage). Everything of husband left to daughter (previous marriage), executor is son (previous marriage of husband). Tax return for business was not filed for 2017 (husband died in April of 2018). Is the wife responsible for filing the business taxes for 2017 or is the executor/estate responsible for filing the business tax return? The estate is insolvent, due to illness of the husband prior to death the business was insolvent and self employment taxes were not paid fully. The wife believes the executor(stepson)/estate needs to file the business tax return and would be responsible for taxes owed and the executor(stepson) believes the wife is responsible for the business tax return and tax liability because she is a co-owner of the business (no matter what the percentage of ownership is). Who would be responsible for filing business tax return and paying any tax liability?

 

[Zigner]

What type of entity is the business?

 

[LdiJ]

Connecticut

My question/scenario is a bit complex. I will try to be as concise as possible. A husband and wife (both second marriages for each) own a business together (husband 98% owner of business, wife 1% owner and stepson - son of wife - 1% owner). The husband dies unexpectedly, the wife is not listed in the will (will filed prior to this current marriage). Everything of husband left to daughter (previous marriage), executor is son (previous marriage of husband). Tax return for business was not filed for 2017 (husband died in April of 2018). Is the wife responsible for filing the business taxes for 2017 or is the executor/estate responsible for filing the business tax return? The estate is insolvent, due to illness of the husband prior to death the business was insolvent and self employment taxes were not paid fully. The wife believes the executor(stepson)/estate needs to file the business tax return and would be responsible for taxes owed and the executor(stepson) believes the wife is responsible for the business tax return and tax liability because she is a co-owner of the business (no matter what the percentage of ownership is). Who would be responsible for filing business tax return and paying any tax liability?

The IRS is going to first towards whomever is listed with them as responsible for the business entity for the tax return. Most likely it was the husband that applied for the EIN number for the business and was therefore listed as responsible for the business. Therefore, his estate would first be held responsible for any business entity returns.

As far as self employment taxes are concerned the wife will be responsible for any balances due on any joint returns previously filed. If the wife does not want to be responsible for self employment taxes for tax years that have not yet been filed, then the wife should opt not to file a joint return with her deceased husband for those years.