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Filing income tax returns for the deceased

Posted on March 15, 2021

If a loved one died in 2020, “A final return must be filed with the IRS, either by the spouse or the Executor, legally noting the date of death,” says Mike Poynter, CPA with Teipen CPA Group.

How to file a final IRS form:

  • Surviving spouses can file a joint return in the year of death, no matter when during the year their spouse died. The return can use the married filing jointly
  • In general, you can use IRS Form 1040, as you would for living taxpayers, but note the date of death on the top.
  • If there’s no surviving spouse, then the Trustee, Executor or Administrator must file IRS Form 56 letting the IRS know that they are the person responsible for the final tax return.
  • All income up to the date of death must be reported, and all credits and deductions to which they are entitled can still be claimed.
  • If, however, the surviving spouse remarries before the year of death is over, then the deceased taxpayer’s return must use the married filing separately status.

Forms and information needed to file on behalf of the deceased:

  • W-2s, 1099s and other tax forms for the year of death, reporting income or expenses paid before the person died.
  • IRS Form 1040 to file for the year of death.
  • Some states require a Death Certificate to be sent with the return. In certain circumstances it may be needed for the federal return as well. Check with your CPA.
  • Form 56: If you are a Trustee, Executor, Administrator or other person responsible for the person’s estate, you must file this form.
  • Form 1310, Statement of Person Claiming Refund Due a Deceased Taxpayer will need to be filed if a refund is due from the last tax return. This is necessary for the IRS to pay the refund to the decedent’s estate or trust.
  • Form 1041, U.S. Income Tax Return for Estates and Trusts is needed to report more than $600 in annual gross income (such as dividends, interest, proceeds from the sale of assets) received after death.
  • IRS Publication 559,  Survivors, Executors and Administrators can provide additional information about these requirements.
  • Income received after the date of death, such as from assets sold after death, may have to be reported on a separate return for the deceased person’s estate or trust (Form 1041).

The deadline for filing a deceased’s 2020 final federal tax return is April 15, 2021. If you can’t gather the paperwork in time, you can file for an extension to October 15, 2021. But this extension only changes the filing deadline; any money that is owed to the IRS is still due by April 15.

The tax-related requirements can be complicated and stressful, especially if there are medical bills coming in months after the person dies. If uninsured medical expenses were incurred but not paid prior to death, the surviving spouse or executor must make an educated and important choice about how those expenses will be treated for federal tax purposes.

“If you are dealing with the final papers for a deceased person, seek professional help from an attorney, CPA or other expert,” recommends Mike Poynter. “This is especially true for complicated or large estates. If something goes wrong or a document is missed, it is possible to have personal exposure to financial risk.”