who is responsible for a deceased persons taxes

It is said that death and taxes are the two guarantees in life. The passing of a loved one is stressful enough without having to worry about the deceased person’s taxes. What happens to the tax filing though when a person dies? Do you have to notify the IRS and if yes how?

When someone dies they are referred to as  the decedent and for federal purposes most decedents have a filing requirement if his or her income exceeds the standard deduction for that year. The surviving spouse, legal representative or executor of the decedent’s estate would have the authority to submit the return.

An executor can be named in a will and formally appointed by court decision. Some of the executor’s responsibilities are to:

  • Have the deceased person’s will probated 
  • Identify the decedent’s assets and liabilities
  • Administer the assets
  • File tax return and pay tax due for the decedent’s estate

How to File Taxes if Someone Passes Away?

If the decedent passes away and is survived by a spouse, the husband or wife can still file married filing jointly on their Form 1040 for that year. This is true even if the surviving spouse does not remarry during the year of death.

Whether the decedent was married or unmarried the person filing their final return must write ‘Deceased’ and the decedent’s date of death at the top of the Firm 1040. The due date of the decedent’s tax return is still April 15th.

If the deceased person has unfiled returns and tax owed from prior years the IRS can place a lien on the estate in an attempt to collect the amount due. If the tax owed exceeds amounts available to the estate it may be possible to settle the debt for less. It is recommended that a tax professional be consulted as this option is not available in all circumstances.

Do You File Taxes for Business Owners After They Die?

There are instances in which the decedent continues owns assets that continues to make money. This usually happens when the decedent owns a business or real estate investments. In these cases the decedent’s estate really earns the money and would have to file Form 1041, an income tax return for estates, if the gross income exceeds $600 for the year. Typically the due date for Form 1041  is April 15 of the following year.

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