Til Death Do Us Part: Paying Income Taxes for a Deceased Person
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Think because a loved one died, you won’t have to deal with the IRS? Think again. The good news is that, with the right professional knowledge, filing a tax return for a deceased person doesn’t have to be difficult. While there are different types of taxes, this article will discuss federal income taxes.
Even though the taxpayer died, taxes still must be filed for that person by April 15 of the year that follows the person’s death. When filling out the last tax return, use the same form the taxpayer would use if still alive but write DECEASED after the person’s name. On the tax return, report the income the taxpayer earns from the beginning of the year until the date of death.
Who Files the Taxpayer’s Final Tax Return
- The executor will usually file the final tax return. If you are the executor, be sure to sign the return for the deceased taxpayer. If a joint return is filed, don’t forget to get the spouse to sign as well.
- If feeling able, a surviving spouse may also file the return. The surviving spouse qualifies as a widow or widower for two years after the spouse’s death, which allows them to use the tax brackets that are used when filing married-filing-jointly returns. The surviving spouse needs to sign the return and write filing as surviving spouse, where the decedent would have signed.
- If there is no executor or spouse to file to return, another person may be responsible for filing the last tax return, in which case that person should sign the return, saying that they are signing on behalf of the decedent.
If a refund is due, be sure to also file Form 1310 Statement of Person Claiming Refund Due a Deceased Taxpayer, found at http://www.irs.gov/pub/irs-pdf/f1310.pdf, with the IRS.
Savings and Investments
If the taxpayer has savings or other investments, only interest earned up to the date of the person’s death is reported on their tax return. Money earned after the taxpayer’s death is taxed to the account beneficiary or the estate. Get ownership of these types of accounts changed as fast as possible after the taxpayer’s death. Since this type of income is usually reported on a 1099 form, the form may show more income for the taxpayer than it should. When this happens, report the whole amount on Schedule B of the deceased’s return and deduct the amount that’s reported by the estate or beneficiary who collected the income.
Deductions
Deductions taken before death can be recorded on the taxpayer’s final return. The cost of an illness (medical bills) can also be deducted on the taxpayer’s final return, recorded as being paid at the time expenses were incurred.
About the Author
Becky Schmitz is the owner of Centsable Accounting, based in Billings, Montana. Centsable Accounting is a tax problem resolution firm that helps people nationwide fix their tax problems, which includes helping with unfiled tax returns.
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