If you’re the executor of someone’s estate, one thing that’s easy to overlook is the deceased’s final tax filing. It’s an important part, however, of handling his or her estate.
If you’re already overwhelmed with the duties associated with the deceased’s funeral and possessions or find your own taxes overwhelming, you can always get professional assistance. If you’re willing to tackle the job on your own, however, here are some important things you need to know:
1. You may not have anything you have to file
In many cases, older adults who have little income beyond Social Security benefits may not have filed tax returns in years. If that’s so, the odds are good that you have nothing to file. If you’re unsure, the IRS runs an interactive program that can help you determine the necessity of filing.
2. You cannot file a deceased’s final tax return online
As difficult as it may sound, you have to go “old school” on this task and file it using a manual form. If the deceased is due a tax return, you claim it with an additional form — the IRS Form 1310. This will allow you to claim the return on behalf of the estate.
3. If the deceased owes taxes, you’ll have to pay them out of the estate
That may be difficult to do if the estate hasn’t settled yet. You may need to work with the IRS on the issue or request some form of payment plan.
4. Only report earnings prior to death on the deceased’s return
Income like interest, dividends from stocks or capital gains only have to be reported if they were earned prior to death.
5. Income received after the death is filed on the estate’s tax forms
The tax year, for the deceased, is from the start of the year to his or her death. Income from stocks, bonds or other sources that comes after death is part of the estate’s tax return.
Keep in mind that you can be penalized personally if you forget to file — which means that it’s very important to make sure that this step is completed as part of the estate’s probate and other closure processes.