North Dakota Estate Tax Filing After Death: Form 38 and Final Returns

The tax obligations of a North Dakota estate are often the piece personal representatives handle last and understand least. The filing requirements are straightforward — North Dakota has no estate tax, making the tax side of estate administration simpler than in many states — but several separate returns may be required, and missing them creates penalties and delays the estate closing.

There are three distinct tax situations to address: the decedent's own final individual income tax return, the estate's fiduciary income tax return if the estate earns income, and the question of withholding for non-resident beneficiaries. Each is a separate filing with a separate deadline.

North Dakota Has No Estate Tax

North Dakota repealed its state estate tax in 2005. There is no North Dakota estate tax return to file and no state estate tax to pay, regardless of the estate's size.

Federal estate tax is a separate matter, governed entirely by federal law. The federal estate tax applies only to estates exceeding the applicable federal exclusion amount — currently over $13 million per individual, though this figure is scheduled to revert to approximately half that level in 2026 unless Congress acts. Most North Dakota estates will not be subject to federal estate tax. Those that may be — particularly large farm estates given the appreciation in agricultural land values — should consult an estate attorney and CPA who can advise on portability elections, special use valuation for farm property (IRC § 2032A), and installment payment of estate tax (IRC § 6166).

For the vast majority of North Dakota estates, federal estate tax is not a filing obligation.

The Final Individual Income Tax Return

The personal representative is responsible for filing the decedent's final federal Form 1040 and final North Dakota Form ND-1 for the year of death. The filing covers income earned from January 1 through the date of death.

The final return is due on the same date as a living taxpayer's return — April 15 of the year following death, with the same extension options. Write "Deceased" and the date of death at the top of the return. If the decedent was married and filed jointly, the surviving spouse may file a joint return for the year of death, and the personal representative's signature is required alongside the surviving spouse's.

Common income items on a final return include wages, Social Security benefits, investment income, rental income, and retirement distributions received before death. Income received after death — royalties, rent, interest — is typically income to the estate and reported on the fiduciary return, not the final 1040.

The decedent's prior-year returns should also be reviewed. If the decedent had unfiled returns, the personal representative is responsible for preparing them. Overpayments resulting in refunds belong to the estate. Underpayments become estate obligations and must be paid before distributions to beneficiaries.

Getting an EIN for the Estate

Before the estate can open a bank account, file a fiduciary tax return, or receive income in the estate's name, it needs a federal Employer Identification Number (EIN). An EIN is a tax identification number for the estate entity — separate from the decedent's Social Security number, which should not be used after death.

The IRS issues EINs free through its online application system (EIN Online Assistant). The process takes about 15 minutes and the number is issued immediately. The estate EIN is used on:

• The estate's bank account
• All fiduciary tax returns (Form 1041 federally, Form 38 in North Dakota)
• 1099 forms received for estate income
• Correspondence with North Dakota HHS regarding Medicaid recovery
• Any W-9 forms provided to financial institutions or operators paying income to the estate

Obtain the EIN early in the administration process — typically within the first week or two after receiving Letters Testamentary.

North Dakota Form 38: The Fiduciary Income Tax Return

If the estate earns income during the administration period, it is a separate taxpaying entity. North Dakota Form 38 is the Fiduciary Income Tax Return for estates and trusts. It is required whenever federal Form 1041 is required.

Federal Form 1041 is required when the estate has gross income of $600 or more during the tax year. This threshold is easily crossed by any estate that holds interest-bearing accounts, collects rent, receives royalty income (including oil and gas royalties from mineral interests), or sells assets at a gain during the administration period.

An estate's tax year begins the day after the date of death. Unlike individual taxpayers, estates can elect a fiscal year rather than a calendar year for Form 1041 purposes. Choosing a fiscal year can sometimes defer income and shift distributions into later periods, which may benefit beneficiaries. This is an election made on the first filed Form 1041 and cannot be changed retroactively.

North Dakota Form 38 is due on the same date as the federal fiduciary return — the 15th day of the fourth month after the close of the estate's tax year. For a calendar-year estate, that is April 15.

Quarterly Estimated Taxes: Form 38-ES

If the estate expects to owe more than $1,000 in North Dakota income tax for the year, quarterly estimated tax payments are required using Form 38-ES. This mirrors the federal requirement for estimated payments when the estate expects to owe more than $1,000 in federal income tax.

Estates with significant royalty income — particularly Bakken mineral interests with active production — can easily reach this threshold within a single quarter. Personal representatives managing income-producing estates should calculate estimated tax obligations early and calendar the quarterly due dates to avoid underpayment penalties.

The four federal estimated payment due dates are April 15, June 15, September 15, and January 15. North Dakota follows the same schedule for Form 38-ES payments.

If the North Dakota Estate Settlement Guide is part of your administration toolkit, it includes a tax filing calendar and Form 38 instructions specific to North Dakota estates, including how to handle mineral royalty income and the estimated payment calculation.

Withholding for Non-Resident Beneficiaries

When the estate makes distributions of income to beneficiaries who are not North Dakota residents, the estate is required to withhold 2.50% of those distributions and remit the withheld amount to the North Dakota Office of State Tax Commissioner.

This applies to income distributed to the beneficiary, not to corpus (principal). If the estate distributes $50,000 of accumulated income to a beneficiary who lives in Minnesota, the estate must withhold and remit $1,250 to North Dakota.

The withheld amount is credited to the beneficiary on their North Dakota non-resident income tax return for the year. Beneficiaries who had no other North Dakota income may be entitled to a refund of some or all of the withheld amount depending on their tax situation.

The personal representative must issue Schedule K-1 (Form 38) to each beneficiary showing their share of income, deductions, and credits, and the amount of North Dakota withholding remitted on their behalf. This is the beneficiary's documentation for filing their own North Dakota return.

Electronic Filing for Larger Estates

North Dakota requires electronic filing of the Form 38 return when the estate has 10 or more beneficiaries. Estates with fewer beneficiaries may file on paper. Most estates with significant income — and therefore the most complex returns — will exceed 10 beneficiaries and will need to use approved tax software or work through a CPA who can file electronically.

The tax administration side of a North Dakota estate is manageable, but it requires attention to the sequence: get the EIN first, identify income-producing assets, calculate whether estimated taxes apply, file the final individual return on time, and address the non-resident withholding requirement before the estate closes. Doing these in order prevents penalties and keeps the closing timeline on track.

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