Filing the Final Tax Return

As a survivor, executor, or administrator of an estate, you are obligated to file an income tax return reporting all the deceased’s income up to his or her date of death. You will need to be aware of all the credits and deductions the deceased is allowed as if that person had been alive to do it themselves.

You will use the same Form 1040 the deceased would use if he or she were alive. If there’s no surviving spouse, then you must file Form 56, Notice Concerning Fiduciary Relationship, letting the IRS know that you are the person responsible for the final tax return. However, surviving spouses can file a joint return in the year of death, no matter when the spouse died. The return can still use the “married filing jointly” status. If you, as a responsible party, find that the deceased hadn’t filed in previous years, you are responsible for taking care of those returns as well.

If tax is due, submit payment with the return. You may want to use the “Make a Payment” option on the IRS website for such other payment options as a debit card, credit card or electronic funds transfer. If you are unable to pay the amount due immediately, you may qualify for a payment plan or installment agreement.

Should the deceased be due a refund, you may claim it using IRS Form 1310, Statement of a Person Claiming Refund Due a Deceased Taxpayer.

What other IRS forms and information might you need to file for the deceased?

  • W-2s and 1099s that report income or expenses paid before the person died.
  • A death certificate, depending on the state. In some circumstances, it may be needed for the federal return as well.
  • Form 1041, U.S. Income Tax Return for Estates and Trusts, to report more than $600 in annual gross income — dividends, interest and/or proceeds from the sale of assets — received after the deceased has passed on.

Read IRS Publication 559, “Survivors, Executors and Administrators,” for more information about requirements.

The deadline for the final federal tax return is the same as anyone else’s return. If you can’t gather the paperwork on time, you can file for an extension. Remember that any money owed is still due by April 15. Filing for an extension buys you time, but if money is due, estimate an amount and pay that. Then, when you file the return, you can settle any difference due or get refunds that go back to the estate. Any income received after the date of death, such as income from the sale of assets, may have to be reported on a separate return for the deceased’s estate or trust.

Of course, you will likely want to get the advice of legal and financial professionals to make sure you are doing what’s best for the estate in line with IRS rules.

Reach out to Roz Carothers and her team at Triplett & Carothers to learn more.