IRS Taxes Owed After Death: Who Is Responsible?

When an individual passes away, their financial obligations, including taxes, do not disappear. The Internal Revenue Service (IRS) has established procedures for managing the tax affairs of a deceased person, known as a decedent. These rules dictate that a final personal income tax return must be filed. Additionally, the decedent’s estate, which comprises their assets upon death, may also have its own tax filing responsibilities.

Identifying the Responsible Party and Their Initial Duties

When a person dies, the responsibility for their tax matters falls to a personal representative. This individual is either the executor named in the deceased’s will or an administrator appointed by a court if there was no will. The personal representative is legally obligated to handle all tax-related duties for the decedent and their estate, including filing returns and paying taxes from estate assets.

One of the first administrative tasks is to file Form 56, Notice Concerning Fiduciary Relationship. This form establishes the representative’s authority to act on behalf of the deceased for tax purposes, ensuring they receive all IRS correspondence.

The personal representative must also obtain an Employer Identification Number (EIN) for the estate. Upon a person’s death, their assets transfer to their estate, which is treated as a distinct legal entity requiring an EIN for its own tax filings and financial affairs, such as opening a bank account.

Filing the Deceased’s Final Income Tax Return

The personal representative is responsible for filing the decedent’s final federal income tax return, Form 1040 or Form 1040-SR. This return covers the period from the beginning of the tax year up to the date of death, reporting all income earned during that time. Certain steps are required when preparing this return.

The word “DECEASED” should be written across the top of the form, along with the decedent’s name and the date of death. The personal representative or a surviving spouse must sign the return. If a surviving spouse is signing a joint return, they should write “Filing as surviving spouse” in the signature area.

The filing deadline for the final Form 1040 is typically April 15 of the year following the person’s death. If more time is needed, the representative can request an automatic six-month extension by filing Form 4868. This extension provides more time to file but not to pay any taxes owed.

If the estate pays for medical expenses incurred by the decedent, the personal representative can choose to deduct those expenses on the final Form 1040. If the final return results in a refund, Form 1310, Statement of Person Claiming Refund Due a Deceased Taxpayer, may need to be filed to claim it.

Managing the Estate’s Tax Obligations

After a person’s death, their estate becomes a separate taxable entity, and the personal representative must manage its distinct tax obligations. This often involves filing two different types of federal tax returns. The first is the U.S. Income Tax Return for Estates and Trusts, Form 1041.

This return is required if the estate generates more than $600 in gross income from sources like dividends, interest, or rent. If the estate distributes income to beneficiaries, that income is reported to them and the IRS on a Schedule K-1, and the beneficiaries are then responsible for paying tax on their share. The filing deadline for a calendar-year estate is typically April 15.

The second potential tax obligation is the Federal Estate Tax Return, Form 706. This is a tax on the transfer of the decedent’s entire taxable estate, not on the income it generates. A Form 706 is only necessary if the total value of the gross estate plus prior taxable gifts exceeds a high exemption amount. For 2025, this exemption is $13.99 million per individual.

Because the exemption is so high, most estates will not owe any federal estate tax. The personal representative must still calculate the value of the gross estate to determine if a filing is required. If a return is required, it is due within nine months of the date of death, though an extension is possible.

Using Estate Assets to Pay Tax Debts

All tax liabilities of the decedent and their estate must be settled using the assets within the estate. This payment must occur before any funds or property are distributed to beneficiaries. If a representative distributes assets before settling tax debts, they can be held personally liable for the unpaid amount.

Federal taxes hold a high priority among the estate’s debts. When an estate’s assets are insufficient to cover all its debts, a situation known as insolvency, the personal representative must follow a legal order of priority. Debts owed to the United States, including federal taxes, must be paid before most other creditors. Failing to adhere to this priority can have significant personal financial consequences for the representative.

Finalizing the Estate’s Tax Affairs

To formally conclude their tax responsibilities, the personal representative can take specific steps to gain certainty from the IRS. One such step is to request a prompt assessment of the decedent’s taxes by filing Form 4810, Request for Prompt Assessment. This request shortens the time the IRS has to audit the filed returns and assess any additional tax from the standard three years down to 18 months. This allows for a quicker settlement of the estate’s tax liabilities and enables the representative to distribute assets with greater confidence.

An executor can also seek to be released from personal liability for the decedent’s taxes by filing Form 5495, Request for Discharge from Personal Liability. The IRS generally has nine months to notify the executor of any tax due. Once that amount is paid, or if the IRS does not respond within the nine-month period, the executor is discharged from personal liability for any future deficiencies. The IRS can still seek payment from the estate’s assets or its beneficiaries.