The death of a family member is an upsetting, traumatic time. Beyond the loss, there are also the day-to-day details, such as the deceased's last tax return. It’s a task that may feel overwhelming; however, if this effort is your responsibility, complete the tax filing by taking the following steps.
1. How to Find Out Whether You Have To File a Final Tax Return
After someone dies, it is necessary to file their final tax return for that year. This final return is for that year, beginning January 1 and ending the day of the person's death.
You’ll fill out the same tax forms, such as Form 1040, that you would file for that person if still alive. You are allowed to file a joint return, including a living spouse if the deceased person was married.
If you are still determining whether to file a final return, you should speak with the IRS and seek the help of a tax professional.
2. Gather Important Documents
For the final tax return, you’ll need the dead person’s financial information, which includes:
- Bank statements
- W-2s and 1099s that show the deceased final year’s income
- Information about assets
- Information about liabilities
- Information about investment accounts and any other sources of income
- Information about any health insurance benefits due to the deceased
- The filed tax return from the previous year
The final tax return is easier to prepare if you have these documents. If the deceased has an estate, the estate taxes are a separate issue, and working with a tax professional is usually wiser for estate tax issues.
3. Claim Deductions and Credits
Deductions and credits may still be available for the deceased when preparing the final tax return for filing. Some common ones include:
- Medical Costs: If the deceased person incurred medical expenses, claim them if they are higher than 7.5% of the person's yearly adjusted gross income.
- Donations to Charities: Pre-death charitable donations are also deductible.
- Tax Credits for Dependents: If the deceased person had dependents, they might qualify for Child Tax Credit or other credits.
Check all the deductions and credits they could take, which helps ease the tax burden.
4. Consider Filing Form 1310 For Refunds
If the final tax return reports a refund is due, you might need to file Form 1310, Statement of Person Claiming Refund Due a Deceased Taxpayer. This form certifies to the IRS that you have permission to claim the refund on behalf of the deceased. However, you don’t typically need to file Form 1310 if the refund is for a widow or widower. Ask a qualified tax professional if unsure.
5. Understand Deadlines
Your last tax return must be filed on the standard tax date — April 15 of the year after the person dies.
If you want more time to file, there are extensions available. When using an automatic extension, pay any estimated taxes to avoid paying penalties and interest later.
Final Thoughts
After your loved one's death, if it is your obligation to wrap up their affairs, including their taxes, knowing how to proceed is key—how and when to file a final return, take deductions and credits, and deal with estate taxes. There are tax professionals who may help you if you’re struggling.
Important Disclosures
Content in this material is for educational and general information only and not intended to provide specific advice or recommendations for any individual.
This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.
All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.
This article was prepared by WriterAccess.
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