Detailed Answer

There are two different federal filing concepts to keep separate: (1) the estate’s income tax return (Form 1041) and (2) the federal estate tax return (Form 706). Even if you made no distributions from estate bank or investment accounts, one or both returns can still be required.

1) Estate income tax return (Form 1041)

The estate must file Form 1041 (U.S. Income Tax Return for Estates and Trusts) when the estate has gross income of $600 or more for the tax year, or when any beneficiary is a nonresident alien. Gross income includes interest, dividends, rental income, business income, and other receipts the estate realized after the decedent’s death.

If the estate keeps assets intact and those assets produce income (for example, interest on a checking or investment account, dividends, or rental receipts), that income counts to the estate and can trigger the filing requirement even when you make no distributions. See the IRS Form 1041 overview and instructions for details: https://www.irs.gov/forms-pubs/about-form-1041 and https://www.irs.gov/instructions/i1041.

2) Decedent’s final individual income tax return

The decedent’s final Form 1040 covers income earned up to the date of death. Income that accrues after death — for example, interest credited after the date of death — generally belongs to the estate and is reported on the estate’s return (Form 1041) if the estate meets the filing thresholds. For general guidance from the IRS about filing returns when someone dies, see: https://www.irs.gov/individuals/death-and-taxes.

3) Federal estate tax return (Form 706)

Form 706 (United States Estate (and Generation-Skipping Transfer) Tax Return) is not an income return. It is required only when the decedent’s gross estate (plus certain adjustments) exceeds the federal estate tax exemption in effect for the date of death. That threshold changes with federal law and inflation adjustments. If the estate’s gross value exceeds the exemption, a Form 706 must be filed even if you made no distributions. See the IRS guide to Form 706 for filing rules and deadlines: https://www.irs.gov/forms-pubs/about-form-706.

4) Other federal steps and timing

• Obtain an Employer Identification Number (EIN) for the estate (IRS Form SS-4) so the estate can report income and pay taxes. https://www.irs.gov/forms-pubs/about-form-ss-4
• Notify the IRS of the fiduciary appointment (Form 56) if appropriate. https://www.irs.gov/forms-pubs/about-form-56
• Form 1041 is generally due by the 15th day of the fourth month after the end of the estate’s tax year (calendar-year estates: April 15). The Form 706 deadline is generally nine months after the date of death (with a possible extension). See the Form 1041 and Form 706 instructions for exact deadlines and extension rules.

5) Montana-specific considerations

Montana does not impose a separate state-level federal estate tax. However, estates that have Montana-source income or are domiciled in Montana may have state fiduciary income tax filing obligations under Montana income tax rules. Consult the Montana Department of Revenue for state filing requirements and forms: https://mtrevenue.gov/.

Short practical answer

If the estate earned $600 or more in gross income during the estate tax year or has a nonresident-alien beneficiary, file Form 1041. If the gross estate exceeds the federal estate tax exemption, file Form 706. If the estate had little or no income and no nonresident alien beneficiaries, and the estate’s total value falls below the federal estate tax threshold, you likely will not need to file these federal estate returns — but you still must file the decedent’s final Form 1040 as appropriate and keep careful records.

Important caveat

Tax thresholds, filing rules, and deadlines change. Use the current IRS instructions linked above and consult a qualified tax professional experienced with estates to confirm filing obligations for your specific facts.

Disclaimer: This information is educational only and is not legal or tax advice. For advice tailored to your situation, consult a licensed attorney or tax professional.

Helpful Hints

• Inventory and document all estate accounts, deposits, and income sources from the date of death forward.
• Check bank statements and 1099s for interest, dividends, and other income that may have been generated after death.
• Obtain an EIN for the estate early if the estate will hold assets that generate income: https://www.irs.gov/forms-pubs/about-form-ss-4.
• File the decedent’s final individual return (Form 1040) for income up to the date of death even if the estate will file Form 1041 later: https://www.irs.gov/individuals/death-and-taxes.
• If you suspect the gross estate might exceed the federal exemption, start valuation work (real estate appraisals, account statements) promptly — Form 706 deadlines are strict: https://www.irs.gov/forms-pubs/about-form-706.
• Keep separate accounting for estate income and expenses; do not commingle estate funds with personal funds.
• When in doubt, consult a Montana-licensed probate attorney or an estate tax CPA — small facts can change filing requirements.
• Check Montana Department of Revenue guidance for possible state fiduciary returns or withholding obligations: https://mtrevenue.gov/.

If you want, provide specific (non-confidential) details about the estate’s assets and any income received after death, and I can outline likely next steps and documents you’ll need to gather before speaking to a tax professional.