How to File Taxes for a Deceased Parent

Dealing with the loss of a parent is challenging, and managing their financial matters can add to the stress. Filing taxes for a deceased parent is an essential responsibility that ensures compliance with legal obligations and helps settle their estate.

Determining Who Should File

When a parent passes away, the executor or personal representative of the estate is generally responsible for filing their final tax return. This individual is named in the will or appointed by the court if no will exists. If the deceased was married, the surviving spouse may have the option to file a joint return for the year of death, which can sometimes provide tax advantages.

The executor must obtain the death certificate, as it is often required by financial institutions and the IRS. Additionally, IRS Form 56 should be submitted to notify the IRS of the fiduciary relationship, granting the executor authority to handle tax matters. Understanding the deceased’s financial situation will help determine the appropriate tax forms and schedules.

Gathering Necessary Financial Records

The executor should collect all relevant financial records, including income documentation such as W-2s and 1099s. These records provide a full account of the deceased’s income sources, including wages, dividends, interest, and retirement distributions. Bank statements and investment account records should also be reviewed to ensure no income is missed.

In addition to income records, documentation for deductions and credits—such as medical expenses, property taxes, mortgage interest, and charitable contributions—should be gathered. These can significantly reduce tax liabilities. Executors should also check for any carryover deductions from previous years that may apply to the final return.

Filing the Final Individual Return

The final individual tax return for a deceased parent is filed using IRS Form 1040 for the year of death, reporting all income earned up to the date of death. The tax year for the deceased runs from January 1st until their date of death.

Deductions and credits, including medical expenses exceeding 7.5% of the adjusted gross income, can reduce tax liabilities. Executors should also account for any remaining credits or deductions from prior years. If a refund is due, IRS Form 1310 must be completed unless the refund is being issued to a surviving spouse who filed jointly.

Taxes owed must be paid by the regular filing deadline in April, unless an extension is granted. Executors should ensure timely filing to avoid penalties for late submission or underpayment.

Considering Estate or Trust Returns

If the estate generates income after the parent’s death, such as rental income or interest, a separate estate or trust return may be required using IRS Form 1041. Estate income is taxed at different brackets, starting at 10% for income up to $2,900 and rising to 37% for income over $14,450.

The executor or trustee must decide whether the estate will follow a calendar year or a fiscal year for tax purposes. This decision can impact the timing of tax payments and potentially optimize tax outcomes. The choice should be based on the estate’s financial activities and any planned distributions to beneficiaries.

Key Deadlines for Submission

Meeting tax deadlines is crucial. The final individual tax return is typically due by April 15th of the year following the parent’s death. Extensions can be requested using IRS Form 4868, providing an additional six months to file, though any owed taxes must be paid by the original deadline.

For estate or trust returns, deadlines depend on the chosen tax year. If the estate uses a calendar year, the return is due by April 15th of the following year. For a fiscal year, the deadline is the 15th day of the fourth month after the fiscal year ends. Executors should also account for estimated tax payments if the estate generates significant income.

Addressing Potential Liabilities or Refunds

Filing taxes for a deceased parent often involves resolving outstanding financial matters, such as unpaid taxes or unclaimed refunds. If the final return or estate return shows a balance due, the executor must ensure payment is made from the estate’s assets. Beneficiaries are not liable for unpaid taxes unless they have already received distributions.

In cases where a refund is owed, the executor must file IRS Form 1310 unless the refund is issued to a surviving spouse who filed jointly. Refunds may face delays if the estate is complex or discrepancies arise in the returns.

State tax obligations should also be addressed, as states may have their own requirements and deadlines separate from federal rules. Executors should review state-specific tax codes and consult a tax professional if needed. Properly managing these financial responsibilities ensures compliance and avoids complications for the estate’s beneficiaries.