Two things in life are certain - death and taxes. Here's what to
do if the two are combined as far as filing a tax return.
Tax Returns for the Deceased
If a person dies, their finances are immediately converted into
something called an estate. The estate is then responsible for
filing a tax return covering the finances including income and
distributions to heirs and beneficiaries. However, a final
personal tax return must still be filed for the deceased.
The final personal tax return for the deceased is known as Form
1040. Yep, you file the same tax form as you would for any
personal tax return. It is hard to believe the IRS passed up an
opportunity to create another form, but there you go. Miracles
do happen.
When determining the income and taxes due for a person who
passes away, the date of death is the cutoff. All income earned
before that date for the year goes on the personal tax return.
All income earned after death is the responsibility of the
estate and will be reported on the estate tax return.
As to deductions, there is good news. Regardless of the time of
the year when the grim event occurs, you can claim the full
deduction for the year and any other expenses that occur prior
to death. Put another way, you don't have to calculate any
ratios based on the number of months that have passed. If
someone passes away in February, you still get the full
write-offs for the rest of the year.
When a person passes away, an executor or trustee will be in
charge of their estate. The exact designation depends on what
type of estate planning they did. Nonetheless, this person will
sign the tax return and note the person is deceased. This should
take care of everything with the IRS excluding the estate tax
return.
What happens if the deceased is due a tax refund? In such a
situation, the IRS will not just kick out a refund unless the
deceased was married. If married, the refund is sent to the
spouse. If not, you must file a Form 1310 to get the refund.
This form basically says you are claiming the refund, have the
right to do so and absolve the IRS of any involvement in
subsequent disputes.
About the author:
Richard A. Chapo is with
http://www.businesstaxrecovery.com -
recovery of business taxes through tax help and tax relief.
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http://www.businesstaxrecovery.com/articles to read more
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