When an individual passes away, their tax responsibilities for that year must still be addressed. A decedent’s final tax return is filed to report income the deceased earned from January 1 of the year of death up to the date they passed away. This return ensures the IRS receives accurate information and that any taxes owed for that period are properly paid.
Who Files the Decedent’s Final Tax Return?
The responsibility to file this return usually falls to the executor or administrator of the deceased’s estate. If the individual was married at the time of death, the surviving spouse often has the option to file a joint return for that year, which can maximize tax benefits.
Key Details About the Decedent’s Final Tax Return:
- Reporting Period: From January 1st through the date of death.
- Return Type: Typically IRS Form 1040 or Form 1040-SR for seniors.
- Filing Deadline: Generally by the regular tax deadline (usually April 15 of the following year).
- Filing Status: Can be single or married filing jointly if a spouse is involved.
Steps to File:
- Collect Income Documents: Gather all W-2s, 1099s, interest, dividends, and other income documents relevant for the deceased’s earnings before death.
- Calculate Income and Deductions: Include wages, retirement benefits, Social Security income (if reportable), and eligible deductions.
- Complete the Return: Fill out the IRS Form 1040/1040-SR, ensuring it covers only income up to the date of death.
- Indicate Deceased Status: Write “Deceased,” the date of death, and the decedent’s name at the top of the form.
- Sign the Return: The executor, administrator, or surviving spouse must sign, noting their status (e.g., “filing as personal representative”).
- File Promptly: Submit the return by the deadline to avoid penalties.
Income After Death:
Any income earned after the date of death by the estate itself (such as rental income or dividends) is not reported on this return. Instead, it must be reported separately on the estate income tax return (IRS Form 1041).
Common Errors to Avoid:
- Filing a return that includes income earned after death.
- Failing to mark the return as “deceased,” which can delay processing or lead to identity theft risks.
- Ignoring the option for a surviving spouse to file jointly, potentially missing tax benefits.
- Assuming no return is required even when income thresholds are met.
Example:
If John passed away on June 30, 2024, his executor would file a final tax return by April 15, 2025, reporting all income earned from January 1 through June 30, 2024. Any income received after June 30 by John’s estate would be reported separately on Form 1041.
Additional Considerations:
If the deceased owed taxes from previous years, those remain the responsibility of the estate’s executor or administrator. They may work with the IRS to resolve any outstanding balances or arrange payment plans.
Helpful Resources:
For detailed guidance, refer to IRS: Filing a Return for a Deceased Person and our article on Filing Your Taxes After Death for more context on related topics.
Filing a decedent’s final tax return can be complex, but understanding the process and keeping clear records will help ensure an accurate and timely submission that properly closes the taxpayer’s filing obligations.