How to Find Out If a Deceased Person Owes Taxes

When a person passes away, their tax obligations do not disappear. For an executor or administrator, addressing these liabilities is a key part of managing the deceased’s estate. The process involves determining if taxes are owed for the final year of the person’s life and for the estate itself. This investigation covers potential federal and state tax issues, including income, estate, and inheritance taxes.

Initial Search and Document Collection

The investigation begins with a thorough search of the deceased’s personal and financial records. Locate documents that show their financial history, such as previous federal and state tax returns. These returns can point to bank accounts, investment firms, and employers. Also gather any forms that report income, including W-2s, 1099-INT for interest, 1099-DIV for dividends, and 1099-R for retirement distributions. Search for digital records on the deceased’s computer and review bank and brokerage statements for a complete financial picture.

You must also obtain several legal documents to proceed. A certified copy of the death certificate is required by all government agencies. You will also need the court-issued document granting you legal authority over the estate, which is called Letters Testamentary for an executor or Letters of Administration for a court-appointed administrator. Be prepared with the deceased’s full name, Social Security Number (SSN), and last known address for all official communications.

Establishing Fiduciary Authority with the IRS

Before the Internal Revenue Service (IRS) will discuss the deceased’s tax matters, you must establish your legal standing by filing Form 56, Notice Concerning Fiduciary Relationship. This form officially notifies the IRS that you have the authority to act for the deceased or their estate. Without a processed Form 56 on file, the IRS cannot provide you with confidential taxpayer information.

To complete Form 56, you will need the deceased’s name and SSN, your own contact information, and a description of your authority. You must attach a copy of your court-issued documents, such as Letters Testamentary or Letters of Administration, to the form. This step formally creates a legal link between you and the deceased in the IRS’s records.

File the completed Form 56 with the IRS service center where the deceased would have filed their tax returns, as indicated in the form’s instructions. It is best to file this form as soon as you receive your court appointment, as processing can take time. Once processed, the IRS will recognize you as the official point of contact.

Requesting Federal Tax Records

After your fiduciary authority is established, you can request the deceased’s tax records using Form 4506-T, Request for Transcript of Tax Return. This form allows you to get various tax transcripts for free, which provide a summary of tax return information rather than a full copy of the return.

On Form 4506-T, you must specify the type of transcript needed. A “Tax Return Transcript” shows most line items from a Form 1040 and is useful for understanding income and deductions. A “Tax Account Transcript” is often more helpful, as it shows if a return was filed, provides details on payments or penalties, and lists any outstanding balance. You can request transcripts for multiple years on one form.

Submit the completed Form 4506-T by mail or fax to the location provided in the form’s instructions, signing as the fiduciary. Processing can take several weeks, after which you will receive the transcripts by mail. These documents will help you determine if a final return was filed and if any federal taxes are owed.

You may also be able to get information by calling the IRS, but only after your Form 56 has been processed. Be prepared to verify your identity and authority with information from the death certificate and your court documents.

Investigating State Tax Liabilities

You must also investigate potential tax liabilities with the state where the deceased lived and any other states where they earned income or owned property. Each state has its own tax laws and procedures, so this process must be repeated for each relevant jurisdiction. State tax obligations can include a final income tax return, an estate tax, or an inheritance tax, depending on state law.

The approach for investigating state taxes mirrors the federal process. Locate the website for the state’s Department of Revenue or equivalent tax agency. Search the site for information regarding deceased taxpayers or fiduciaries to find the specific procedures and forms required to request tax records and settle any obligations.