Losing a loved one to death is one of the most challenging circumstances in life. The IRS will require the deceased person’s representative to file a final tax return to add insult to injury.
My father passed away early in the year, and I had not completed his tax return for the previous year. I had to file it for him. A year after his passing, I had to file a final return for him as he had received social security and retirement benefits in his last year of life. These were emotional experiences for me. If you are in this position this year, you have my sincerest sympathy, and I hope this information makes the experience less stressful for you.The return must be filed by your loved one’s surviving spouse or representative.
If you are the one filing, follow these steps.
- Gather all tax documents for your loved one as you would prepare your tax return.
- All income received up to death must be included on the final tax return. If the deceased person was elderly, their income likely included: (1) retirement benefits, (2) social security, (3) IRA distributions, (4) Interest and dividends, and (5) investment Income
- If they were younger and still working, they will receive a W-2 or 1099 from those they worked for in the final year of life.
- If filing electronically, you must check the box “Taxpayer Died Before Filing.” If filing a paper return, write “Deceased” along with the taxpayer’s name and date of death across the top of the return. You do not need to include a death certificate or other proof of death.
- If the deceased person was married, the surviving spouse can file Married Filing Jointly or Married Filing Separately for the year of death.
- All credits and deductions for the deceased person were eligible for still apply.
- The appointed representative must sign the return for the deceased individual. The spouse must also sign the return if the person has a surviving spouse. If no representative was appointed and the person did not have a surviving spouse, the person handling the estate should sign the return as a personal representative.
- A personal representative should complete Form 1310, Statement of Person Claiming Refund Due for a Deceased Taxpayer. A court-appointed representative can skip Form 1310 but should include a copy of the court order showing their appointment.
- If the deceased person is due a refund, the representative must agree to distribute the refund to the person’s heirs in accordance with their will. If the deceased person has a tax liability, the personal representative must pay it from the estate asset.
You can use the IRS’s Interactive Tax Assistant (ITA) to help you determine how to file for your specific situation: https://www.irs.gov/help/ita/how-do-i-file-a-deceased-persons-tax-return
If you have not yet filed your tax return, check back next week for tips on filing your return yourself.
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