Overview

When someone dies, their tax records and obligations don’t disappear. The process typically begins with filing the decedent’s final individual income tax return (Form 1040) for the year of death and continues with any estate-level filings if the estate earns income after death or meets federal/state estate tax thresholds.

In my practice as a CPA working with families and executors, the key to a smooth process is early organization: gather documents, confirm who has legal authority (surviving spouse or personal representative), and know which forms use the Social Security number versus an estate Employer Identification Number (EIN).

Authoritative references: IRS — Filing taxes for a deceased taxpayer and IRS Publication 559 (Tax Information for Executors and Administrators) explain rules and forms in detail (https://www.irs.gov/filing/filing-taxes-for-a-deceased-taxpayer; https://www.irs.gov/pub/irs-pdf/p559.pdf).

Who files the final return and which forms to use

  • Final individual return (Form 1040): Covers income from January 1 of the tax year through the date of death. Use the decedent’s name and Social Security number. If married, the surviving spouse can often file a joint return for that year.
  • Estate return (Form 1041): If the estate generates income after death (interest, dividends, rental income), file Form 1041 using the estate’s EIN. Apply for the EIN as soon as the executor is appointed.
  • Estate tax return (Form 706): File only if the gross estate might exceed the federal (or state) estate tax exemption and the executor is responsible for federal estate taxes — Form 706 generally must be filed within nine months after death (with possible extension).

IRS pages: Form 1040 instructions and Form 1041/706 guides; see Publication 559 for detailed timelines and responsibilities.

Step-by-step: Preparing and filing the final Form 1040

  1. Identify who has authority
  • Surviving spouse: can sign a joint return if married at date of death. If you are filing a joint return, show the decedent’s name and date of death on the return.
  • Personal representative / executor: signs the return when no surviving spouse files joint. Sign as “Personal Representative” and attach a copy of the death certificate and proof of appointment when requested by the IRS.
  1. Collect income documents
  • W-2s, 1099s (interest, dividends, brokerage), K-1s, pension/IRA distributions, and Social Security statements for the year-to-date. Some income received after death but allocable to the year of death may need reporting on the final return — see Pub 559.
  1. Get accurate deductions and credits
  • Deductions allowable to the decedent (medical expenses paid before death, unreimbursed business expenses) can be claimed on the final return.
  • If the decedent paid estimated taxes during the year, include those payments on the return.
  1. Sign and file
  • The return is filed by the surviving spouse or executor. Executors should write their title (Executor, Administrator, Personal Representative) next to the signature and include the date of death on the return.
  1. Handling refunds or tax due
  • Refunds due on a joint return generally go to the surviving spouse. Refunds due solely to the decedent should be handled by the estate and paid to the estate or distributed under state probate rules. If the IRS issues correspondence, the executor should respond with proof of authority.

Post-death income and Form 1041

If the estate receives income after death (for example, dividends or rental income), the estate may need to file Form 1041. The estate pays tax on income retained by the estate; income distributed to beneficiaries is reported on K-1s and taxed on beneficiaries’ returns.

Practical note: apply for an EIN for the estate as soon as the personal representative is appointed; do not use the decedent’s SSN for estate income reporting.

Estate tax (Form 706) and thresholds

Not every estate files Form 706. Federal estate tax returns are required when the gross estate exceeds the federal exemption in effect for the year of death. Many estates fall below the threshold, but state estate or inheritance taxes may apply at lower amounts in some states. Executors should:

  • Check the current federal exemption and state rules before assuming no Form 706 is needed.
  • Remember Form 706 must generally be filed within nine months of death; a six-month extension is available (Form 4768) if needed.

Authoritative source: IRS Form 706 and instructions; Publication 559 for executor responsibilities.

Common questions and pitfalls (practical CPA tips)

  • Missing income documents: brokerage firms, employers, and payers sometimes send late 1099s. Search statements and request missing forms early.
  • Using the wrong tax ID: final individual returns use the decedent’s SSN; estate returns use the estate EIN. Using the wrong ID causes processing delays.
  • Not filing state returns: state rules vary widely — check the state revenue department or contact a local tax attorney.
  • Overlooking medical deductions: large medical expenses paid before death can be deductible on the final return if itemized and otherwise qualified.
  • Joint bank accounts and refunds: joint ownership doesn’t automatically make funds part of the estate in all states. Consult probate rules in your state and provide the IRS with the personal representative’s documentation when claiming an estate refund.

In my experience, a small error (wrong EIN or missing signature) is the most common reason an executor receives an IRS notice. Keep a checklist and copies of everything filed.

Timing and statute of limitations

  • File the final Form 1040 by the normal filing deadline (the year after death). If a return is due and you need more time, file for an extension for the decedent’s return, signed by the person authorized to file.
  • Refund claims: generally follow the same statute of limitations as other returns (the IRS usually allows three years from the original filing date to claim a refund), but special rules can apply to decedents — see Pub 559 and IRS guidance.

Practical executor checklist (quick)

  • Obtain multiple certified copies of the death certificate.
  • Locate the will and confirm appointment as executor or get court appointment.
  • Collect all W-2s, 1099s, bank and brokerage statements through date of death.
  • Apply for an EIN for the estate.
  • File final Form 1040 and, if needed, Form 1041 and Form 706.
  • Notify Social Security, financial institutions, and payees to stop benefits or redirect payments.
  • Keep organized records of payments, distributions, and tax filings for at least seven years.

For a detailed checklist tailored to estate and final individual returns, see our guide: Executor’s Checklist for Filing Estate and Final Individual Returns (https://finhelp.io/glossary/executors-checklist-for-filing-estate-and-final-individual-returns/).

You may also find our guide on Tax Planning for Executors helpful when preparing returns: Tax Planning for Executors: Filing the Final Returns (https://finhelp.io/glossary/tax-planning-for-executors-filing-the-final-returns/).

Frequently asked questions

  • Can I file a joint return if my spouse died this year?
    Yes. If you were married and the spouse died during the year, you can usually file a joint return for that year (enter the decedent’s name and date of death). See Form 1040 instructions.

  • Who signs the return when the executor files?
    The personal representative signs and notes their capacity (Executor, Administrator, Personal Representative). Keep a copy of the death certificate and proof of appointment.

  • Do I need to file returns for multiple years if the decedent missed past returns?
    Yes — file any missing returns. The IRS may assess penalties, but filing promptly reduces penalty exposure. If you receive a notice (like CP518/CP518A for unfiled returns), follow the steps to respond promptly.

When to get professional help

Engage a CPA or estate attorney when the estate is large, there are complex investments, business interests, multiple state tax jurisdictions, or potential estate tax exposure. In my practice, early consultation often saves time and money by preventing rushed filings and missed elections.

Sources and further reading

Internal resources:

Professional disclaimer: This content is educational and not a substitute for personalized tax or legal advice. Tax rules change and individual circumstances vary. Consult a qualified tax professional or estate attorney to confirm filing obligations and deadlines for your specific situation.