A Guide to Filing Taxes after Someone Dies
Filing taxes after someone dies can be complicated and confusing. There are a lot of things to consider, such as estate taxes, final tax returns, and what to do if the deceased person owed money to the IRS. Here's what you need to know when it comes to filing taxes after a death and answers to common questions you may have when handling the decedent's affairs.
Disclaimer: This article is for informational purposes only and does not constitute legal, tax, accounting, investment or other professional advice.
How to file taxes after someone dies
If you're responsible for filing taxes for someone after they pass away, here are the steps you'll need to take.
- Identify the marital status. A surviving spouse can file jointly if they have not remarried and have dependents. You'll need to know the marital status of the decedent in order to file their taxes.
- Get the right authorization. Taxes are most often filed by the executor of the estate, the court-appointed administrator, the surviving spouse, or another individual responsible for handling the decedent's property. Since you'll need sensitive information in order to file the decedent's tax returns, you'll need to make sure you can access these records. Typically, most financial institutions will ask that you provide them with specific information in order to access records, most often a death certificate.
- If you can, locate last year's tax return. The previous year's tax return will help you start the current year's tax return. If the decedent filed their taxes online and you don't have their account info, this can get tricky. If you're unable to locate the previous year's tax returns, you can contact the IRS and submit Form 4506-T to request a transcript of the previous year's tax return.
- When filing, update the address. The address on the current year's tax return will likely be the decedent's residential or mailing address. You'll need to make sure you update this to your current address and list it as an "in care of" address.
- Calculate medical costs. If the deceased had lots of medical expenses or was chronically ill, you'll want to assess for the medical deductible. For more information on medical deductibles and expenses, visit the IRS's page on this topic.
- File a form 4810. Filing Form 4810 with the IRS requests that they do a prompt assessment of the tax return. Filing this form can make it so they only have 18 months to review the decedent's tax returns, which can prevent you from a headache down the road. Typically, the IRS has 3 years to see if you paid the right amount of funds for that tax year, filing Form 4810 reduces this timeline to 18 months.
- Hire a professional if needed. If the decedent's estate or taxes feel overwhelming, confusing, or difficult to complete, hiring a professional can be a huge relief. Contacting a CPA or tax attorney can help you navigate the tax system and make sure you're filing the correct paperwork when needed.
How do you notify the IRS of a death?
There is no automatic IRS death notification when someone dies, so it's up to the executor to notify the IRS of a death as soon as possible. To notify the IRS of a death, follow these steps:
- Mail a copy of the death certificate to the location where the person who passed away typically filed their tax return or include a copy of the death certificate with the current tax return.
- Notify the major credit reporting bureaus and request that they list the decedent as "deceased" in their files and on the decedent's credit report.
- Request a copy of the decedent's credit report from the credit bureaus. Keep an eye on the decedent's credit report for any suspicious activity.
- Be mindful of the information you include in any online postings or obituaries that could be of use to those attempting to commit identity theft.
How do you sign a tax return for a deceased person?
How you sign a tax return for a deceased person will depend on your relationship to the deceased individual. Here are the scenarios laid out by the IRS:
- If there is a surviving spouse and there is no appointed administrator or executor, the surviving spouse should sign the tax return and write "Filing as surviving spouse" in the area where you'd include a signature. A surviving spouse is able to file a joint return for the year in which the deceased spouse passed away.
- If there is an appointed administrator or executor, they must sign the tax return. If it's a joint tax return and there's a surviving spouse, the surviving spouse must also sign the tax return.
- If there is no surviving spouse and there is no appointed representative, the person who is responsible for the decedent's property will file and sign the return as the "personal representative". (This person is typically chosen by the probate court.)
For more information on how to sign the tax return, visit this page of the IRS site.
Do you have to file taxes for a deceased parent?
You do not have to file taxes for a deceased parent unless you are the appointed executor of the estate. Typically, filing a deceased person's taxes is a responsibility that falls to the executor, the appointed administrator, or the surviving spouse of someone who has passed away.
Do I need to file an estate tax return?
If you're in charge of handling an estate, you may be asking yourself, "When is an estate tax return required?" The good news is that final estate tax returns are not required for every estate.
You are required to file an estate tax return in a few different scenarios. The IRS states that you must file an estate tax return, "if the gross estate of the decedent, increased by the decedent's adjusted taxable gifts and specific gift tax exemption, is valued at more than the filing threshold for the year of the decedent's death." The filing threshold changes yearly, so you'll need to make sure you're aware of what the current year's threshold is. For 2022, the filing threshold is $12,060,000.
You must also file an estate tax return if the estate chooses to transfer any "deceased spousal unused exclusion (DSUE) amount to a surviving spouse".
Additionally, an estate tax return needs to be filed for a decedent if they were a nonresident and were not a U.S. citizen if they had U.S.-situated assets.
For more information on filing an estate tax return and specific guidelines on estate taxes after death, visit the IRS's website.
What happens if a deceased person owes taxes?
The IRS can pursue collection of unpaid or owed taxes from the decedent's estate for up to 10 years after the initial tax liability was assessed by the IRS. It's up to the administrator or executor of the estate to file the taxes for the decedent and to handle any inquiries from the IRS regarding unpaid taxes. If the decedent owes large amounts of unpaid taxes, it's worth meeting with a CPA or tax planning lawyer to assess the options available.
Who is responsible for filing taxes after death?
The executor of the estate is responsible for paying the decedent's taxes after death. If the decedent has a surviving spouse, the surviving spouse is responsible for filing joint taxes after the death of their spouse.
If you are the executor of your parent's estate, you are responsible for filing income tax for your deceased parent. If you are not the appointed executor of the estate, this responsibility does not fall to you and instead, falls to the appointed executor, administrator or surviving spouse. Executors or court-appointed administrators are responsible for filing taxes for deceased individuals with no estate.
What happens if you don't file taxes for a deceased person?
In the event that you (or the executor of the estate) do not file taxes for a deceased person, the IRS can pursue legal action by putting a federal lien against the estate. A federal lien against the estate means that you're required to pay off federal taxes owed before you can pay off any other debts or accounts. Ideally, you or the estate executor avoids this by filing taxes as having a federal lien against the estate will halt an already incredibly lengthy process.
Do you have to pay taxes on money you receive as a beneficiary?
Generally, beneficiaries are not required to pay income tax on any money or property that they inherit. A common exception to this is money that's withdrawn from a 401(k) plan or inherited retirement account.