How to Handle Virginia Estate Taxes Without Hiring a CPA

You can handle Virginia estate taxes without a CPA if the estate has straightforward income --- wages, Social Security, pension, bank interest, retirement distributions --- and does not involve business interests, rental properties, or multi-state tax obligations. The process requires filing the decedent's final Virginia Form 760, the estate's fiduciary Form 770 (if gross income exceeds $600), the federal Form 1041, and paying the probate tax at the Circuit Court. None of these require a licensed accountant. What they require is understanding the Virginia-specific rules that create penalty exposure --- particularly the 90% payment trap on Form 770 and the Commissioner of Accounts' demand that every tax payment appear as a documented disbursement in your accounting.

The Virginia Final Tax & Estate Tax Guide walks you through every filing, every deadline, and every interaction with the Commissioner's audit requirements. Here is what the process looks like and where the traps are.

The Four Tax Obligations Virginia Executors Face

Virginia executors deal with four separate tax regimes. The confusion comes from the fact that they have different forms, different deadlines, and different filing rules --- and most executors conflate them.

1. The Decedent's Final Individual Income Tax Return

What it is: The decedent's personal income tax return covering January 1 through the date of death.

Forms: IRS Form 1040 (federal) and Virginia Form 760 (state).

Deadline: April 15 (federal) and May 1 (Virginia) of the year following death.

What you need to know: If the decedent was married, the surviving spouse can file a joint return for the final year. Write "DECEASED" and the date of death across the top of the return. If a refund is due, the person filing must also submit IRS Form 1310 (Statement of Person Claiming Refund Due a Deceased Taxpayer) and include a copy of the death certificate with the Virginia paper return.

Can you do this without a CPA? Yes. If you can file a standard personal tax return, you can file the decedent's final return. The income types are the same --- W-2, 1099-R, 1099-INT, Social Security. The only difference is the shortened tax year and the "DECEASED" notation.

2. The Estate's Fiduciary Income Tax Return

What it is: A separate tax return for the estate as its own legal entity, covering income earned after the date of death.

Forms: IRS Form 1041 (federal) and Virginia Form 770 (state).

Threshold: Required if the estate's gross income is $600 or more during the tax year, or if the estate has a nonresident beneficiary with Virginia-source income.

Deadline: Due by the 15th day of the fourth month after the estate's tax year ends. For calendar-year estates, this is April 15. Virginia grants an automatic six-month extension for filing.

The 90% payment trap: Virginia's extension only covers the paperwork. At least 90% of the final tax liability must be paid by the original due date. Underpay and Virginia imposes a 2% per month extension penalty (capped at 12%) plus a separate 6% late payment penalty. This trap catches more first-time executors than any other Virginia tax rule.

Can you do this without a CPA? Yes, for standard estates. The fiduciary return uses the estate's federal modified taxable income as its starting point. If the estate's income comes from bank interest, dividends, and retirement distributions, the calculation is manageable. The critical step is getting the 90% payment right.

3. The Probate Tax

What it is: A state tax assessed at the time of qualification at the Circuit Court.

Rate: 10 cents per $100 of estate value exceeding $15,000, plus a local surcharge of up to one-third the state rate.

When it is paid: At the Circuit Court clerk's window when you qualify as executor.

Can you handle this without a CPA? Absolutely. This is a simple calculation you make at the clerk's office. No CPA involvement is needed or standard.

4. The Federal Estate Tax (Form 706)

What it is: A tax on the total value of the estate before distribution to heirs.

Threshold: Only required if the gross estate plus lifetime taxable gifts exceeds $15 million per individual ($30 million for a married couple) under the One Big Beautiful Bill Act, effective January 1, 2026.

Reality check: Fewer than 0.1% of estates reach this threshold. If the estate is under $15 million, Form 706 is not required unless the surviving spouse wants to elect portability (claiming the deceased spouse's unused exemption for future use).

Can you handle this without a CPA? If Form 706 is required because the estate exceeds $15 million, hire a CPA and an estate tax attorney. The form is over 40 pages and involves professional valuations, valuation discounts, and complex deduction calculations. If the estate is under $15 million and you are only filing for portability, a Virginia-specific guide can walk you through the simplified filing.

The Commissioner of Accounts Connection

Here is what no national tax guide explains: in Virginia, your tax filings and your Commissioner of Accounts filings are not separate tracks. They are interconnected.

The Commissioner audits your accounting (Form CC-1680), which must show every dollar that entered and left the estate. Every tax payment --- probate tax, estimated fiduciary tax payments, the final income tax refund or payment --- must appear as either a receipt or a disbursement, with supporting documentation.

If you paid the probate tax at qualification, that is a disbursement. If you made a Form 770ES estimated payment, that is a disbursement. If you received a refund on the decedent's final Form 760, that is a receipt. The accounting's math must balance: beginning assets plus all receipts must exactly equal all disbursements plus assets on hand.

Filing your taxes correctly but recording them incorrectly in the accounting will get you flagged by the Commissioner. The Virginia Final Tax & Estate Tax Guide explains how to structure every tax payment so it flows correctly into the Commissioner's required format.

The Step-by-Step Sequence

If you decide to handle Virginia estate taxes yourself, here is the order that prevents penalties and keeps the Commissioner satisfied:

1. Before qualification: Determine if the estate qualifies for the Small Estate Act ($75,000 threshold). If it does, you may not need to qualify at all, which eliminates the Commissioner and reduces tax complexity.

2. At qualification: Pay the probate tax at the Circuit Court. Keep the receipt --- it is a required disbursement in your accounting.

3. Within 30 days of qualification: Apply for an EIN for the estate through the IRS website (Form SS-4 online). Open a dedicated estate bank account using the EIN. Never use the decedent's Social Security number or your own.

4. Within four months of qualification: File the inventory (Form CC-1670). Include all assets at date-of-death values.

5. By the tax filing deadline: File the decedent's final Form 760 and Form 1040. If a refund is due, file Form 1310 and include the death certificate.

6. By the fiduciary return deadline: Calculate the estate's income since the date of death. If it exceeds $600, prepare and file Form 1041 and Form 770. Pay at least 90% of the Form 770 liability by the original due date, even if you are using the extension for the paperwork.

7. Within sixteen months of qualification: File the accounting (Form CC-1680). Include every tax payment as a disbursement with receipts.

8. Before final distribution: Ensure all tax obligations are satisfied. Virginia Code Section 64.2-528 establishes a strict priority for debt payments. Federal and state taxes rank high. Distributing to beneficiaries before paying taxes creates personal liability for the executor.

When to Stop and Hire a CPA

Handle it yourself when the estate has:

• Wage, pension, and Social Security income
• Bank interest and dividends
• Retirement account distributions (IRAs, 401(k)s)
• A primary residence with a clear step-up in basis
• One state of residence (Virginia)

Hire a CPA when the estate has:

• Active business interests generating K-1 income
• Rental properties requiring depreciation and passive loss calculations
• Income from multiple states
• Complex trust structures
• Gross assets approaching or exceeding $15 million
• An IRS audit pending on the decedent's prior returns

The line is not about intelligence or capability. It is about computational complexity. Standard income types produce standard tax returns. Complex income types produce complex tax returns that benefit from professional software and professional judgment.

Frequently Asked Questions

What is the most common mistake when filing Virginia estate taxes without a CPA?

Misunderstanding the 90% payment rule on Form 770. Executors see the automatic six-month filing extension and assume they have extra time for everything. They file the return during the extension period but pay the full amount only at that point. Because they did not pay 90% by the original due date, Virginia imposes a 2% per month extension penalty plus a 6% late payment penalty. The combined penalties can add 12--30% to the tax bill.

Do I need to file Form 770 if the estate earned less than $600?

No. Virginia Form 770 is required only if the estate's gross income is $600 or more during the tax year, or if the estate has a nonresident beneficiary with Virginia-source income. If the estate earned less than $600 and has no nonresident beneficiaries, no fiduciary return is required.

How does the estate's fiduciary return interact with beneficiary taxes?

The estate acts as a pass-through entity. If the estate retains income, the estate pays the tax. If it distributes income to beneficiaries, the tax burden shifts to the beneficiaries, who receive a Schedule K-1 detailing the income they must report on their personal returns. The guide explains when to retain income versus distribute it and how each choice affects the overall tax burden.

Can I use TurboTax or other tax software for estate returns?

TurboTax handles the federal Form 1040 and can prepare Form 1041. However, it does not prepare Virginia Form 770 or handle the Virginia-specific 90% payment calculation. You will need to prepare Form 770 separately, which is where the Virginia estate tax guide provides the most value --- by explaining how the federal numbers carry into the state form and where the penalty traps are.

What happens if I make a mistake on the accounting and the Commissioner flags it?

The Commissioner of Accounts will send a deficiency notice identifying the discrepancy. You typically have an opportunity to correct and resubmit. If the error involves a mathematical imbalance (receipts and disbursements do not reconcile), you must identify the missing or misclassified transaction. If the error involves a late filing, the Commissioner can impose delinquency fees. The guide helps prevent these issues by showing you how to structure every payment --- including tax payments --- in the format the Commissioner expects.

Is the step-up in basis automatic?

The legal entitlement is automatic --- inherited assets receive a basis equal to fair market value on the date of death. But the documentation is not automatic. You need a date-of-death appraisal for real estate, date-of-death account statements for financial assets, and proper recording of these values on the estate's inventory. If you sell inherited property without documenting the stepped-up basis, the IRS may default to the original purchase price, resulting in a potentially massive capital gains tax bill. The guide explains exactly what documentation to obtain and when.

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