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The possibility of your Florida estate undergoing an IRS audit

On Behalf of | Jul 17, 2023 | Tax Law

The passing of a loved one can be an emotionally charged time. Among the many responsibilities that the family or executor assumes, one important task involves the management of the decedent’s estate. An aspect of this management can include the potential of an audit from the Internal Revenue Service.

Learn more about the circumstances under which your Florida estate may come under scrutiny from the IRS after your passing.

Factors that can trigger an audit

The IRS may choose to audit an estate if they believe there may be discrepancies or issues with the reported estate values or tax filings. Report estate assets and file the necessary tax documents accurately and promptly to avoid attracting an audit.

  • Large estates, particularly those exceeding the federal estate tax exemption limit, are more likely to attract an audit.
  • Estates with varied types of assets, such as real estate, stocks, bonds and businesses, can also be subject to more scrutiny.
  • Tax return errors. The IRS may also conduct an audit if there are errors or inconsistencies in the estate tax return.

In addition, if the estate generates income, the IRS may choose to do an audit.

How to prepare for a potential audit

If you are an executor or a family member handling the estate, you need to keep detailed records. This includes documentation of asset valuations, tax returns and any income the estate generates. Being thorough and accurate in your record-keeping can make the audit process smoother, should it occur.

Implications of an audit

An IRS audit can result in adjustments to the reported estate value and potentially result in additional taxes, interest or penalties. It is important to address any issues that come up in the audit promptly and accurately.

Your Florida estate can indeed face an IRS audit after you die. Proper planning, accurate reporting and meticulous record-keeping can help prepare for this possibility and ensure a smoother process for your loved ones.