Chances are you’ve heard the saying “In this world nothing is certain, but death and taxes”, and as it turns out, taxes are certain even if preceded by death. In fact, a decedent's executor must file one last tax return for the deceased, with a few conditions which we’ll discuss here.
The decedent's marital and parental status are key factors since there are special rules for families:
The deceased’s spouse may file a joint tax return for the year of the spouse's death. However, if the spouse remarries during that same year, a "married filing separately" return should be filed.
If the surviving spouse has a dependent child, they might receive a tax break for up to two tax years following the death. The surviving spouse referred to as the ‘qualifying widower’, can pay the tax rate that applies to married couples, which could mean a smaller tax bill.
To be eligible;
- you must have been entitled to file a joint return with your deceased spouse for the year of their death,
- you must not be remarried before the end of the current tax year,
- you must have had a dependent child,
- you must have provided more than half the cost of maintaining your home (considered head of household)
What forms should I use to file taxes for the deceased?
You’re probably familiar with Form 1040 for a federal income tax return, start there. If you're the executor, you will sign the form in the capacity of estate representative, and if you are the surviving spouse and are filing a joint return, you will sign it yourself. Be sure to add the words "filing as the surviving spouse" after your signature. An executor who is appointed before the return is due will need to sign as well.
In the case where there is no surviving spouse and an executor has not been appointed, whoever has taken charge of the deceased’s property should sign the return as a ‘personal representative’.
Any income that was earned by an estate or trust should be reported on IRS Form 1041.
As with any other income tax return, the returns are due on April 15 of the year after death. If the deceased person didn't file a tax return for the prior year, you'll need to file that tax return as well. Although there is no extra paperwork needed to claim a refund for a surviving spouse on a joint return, there are additional forms in other situations.
If you're not sure if your loved one's estate or trust will be subject to taxes or if you're not sure whether what you have inherited will be subject to taxes, call estate planning attorney Charles (Chuck) Bendig, as settling an estate can be complicated.
