How to File a Final Tax Return for a Deceased Person

A final tax return for a deceased person is a necessary step in settling an individual’s financial affairs after their passing. This return covers the period from January 1st of the year of death up to the date of death, reporting all income earned and deductions incurred during that time.

Determining Who Files

The responsibility for filing a deceased person’s final tax return rests with the personal representative of the estate. This individual is an executor named in a will or an administrator appointed by a court. If no formal executor or administrator is designated, a surviving spouse or another close family member who is handling the deceased’s property may assume this role. The personal representative gathers all necessary financial information, ensures all required tax returns are filed, and pays any taxes due from the estate’s assets before distributing them to beneficiaries.

A surviving spouse often has the option to file a joint return for the year of death, even if they remarry later in the same tax year. This can offer tax advantages compared to filing separately. If a joint return is chosen, the surviving spouse can sign the return, indicating “filing as surviving spouse” in the deceased’s signature area. If a court-appointed personal representative is involved, they must also sign the return; for a joint return, the surviving spouse must sign as well.

If there is no surviving spouse and no court-appointed personal representative, the person in charge of the deceased person’s property can file and sign the return as a “personal representative.” For any refunds due to an unmarried deceased taxpayer, Form 1310 is required to claim it, unless the claimant is a court-appointed personal representative.

Gathering Necessary Information and Documents

Preparing the final tax return for a deceased individual requires collecting specific information and documents. This includes the deceased’s full name, Social Security Number, and exact date of death. While not always required with the tax return, a copy of the death certificate is advisable, as it may be requested by the IRS or other entities.

A review of all income statements is essential. This includes W-2 forms for wages, and 1099 forms for interest (1099-INT), dividends (1099-DIV), retirement distributions (1099-R), and miscellaneous income (1099-MISC). Records of other income sources, like business or rental income, are also necessary. Documentation for all potential deductions and credits should be gathered, such as receipts for medical expenses, charitable contributions, and records of state and local taxes paid.

Information regarding any estimated tax payments made by the deceased during the year is crucial. Reviewing prior year tax returns can provide insight into recurring income, deductions, and potential carryovers that might apply to the final return.

Understanding Specific Tax Rules for Deceased Individuals

The final tax return for a deceased person follows many of the same rules as a living taxpayer’s return, but it incorporates unique considerations. Only income received and deductions incurred up to the date of death are reported on this final return. Any income earned but not received by the deceased before death, which is subsequently paid to the estate or a beneficiary, is classified as “Income in Respect of a Decedent” (IRD).

IRD can include unpaid salaries, wages, commissions, accrued interest, and certain distributions from retirement accounts or deferred compensation plans. This income is reported by the recipient (either the estate or the beneficiary) in the year it is received and is subject to income tax. While IRD is also included in the deceased’s gross estate for estate tax purposes, a deduction for the estate tax attributable to the IRD may be available to the income recipient, helping to mitigate potential double taxation.

Medical expenses paid by the deceased before death can be deducted on their final return, subject to adjusted gross income limitations. If medical expenses are paid by the estate within one year after death, they can be treated as paid by the deceased at the time the medical services were provided. Capital losses incurred by the deceased up to the date of death can be reported on the final return; any unused capital losses expire and cannot be carried forward to the estate or beneficiaries.

For a surviving spouse, filing status is an important consideration. For the year of death, a surviving spouse can file a joint return with the deceased, even if the death occurred early in the year. This allows for the use of joint return tax rates and the highest standard deduction. In the two years following the year of death, if the surviving spouse has a dependent child and does not remarry, they may be eligible to file as a “Qualifying Widow(er).” This status provides the benefit of joint return tax rates and the highest standard deduction.

Completing and Submitting the Final Return

The final tax return for a deceased person is filed using Form 1040, or Form 1040-SR for seniors. When preparing a paper return, clearly mark “Deceased,” the deceased person’s name, and the date of death across the top of Form 1040. If e-filing, tax software will guide the user on how to indicate the taxpayer is deceased and input the date of death.

The personal representative or surviving spouse signs the return. For a refund claim by someone other than a surviving spouse or court-appointed personal representative, Form 1310, “Statement of Person Claiming Refund Due a Deceased Taxpayer,” must be attached.

The filing deadline for the final tax return is April 15 of the year following the individual’s death. If more time is needed, an extension can be requested using Form 4868, which provides an additional six months to file. The return can be submitted electronically through tax software or mailed to the appropriate IRS service center. While a copy of the death certificate is not required with the return, having it on hand for potential future requests is prudent.