Death of a Taxpayer

(IRS - Topic 356)

A personal representative (fiduciary) is responsible for filing certain tax returns for a person who has died, and for the decedent's estate.

Types of Returns that need to be filed:

Form 1040  - Income received by decedent up to the time of death is included in the decedent's final individual tax return.  The final return should have the word "Deceased," the decedent's name, and the date of death written across the top of the return.

Generally, the person who is filing a return for a decedent and claiming a refund must file Form 1310, Statement of Person Claiming Refund Due a Deceased Taxpayer, with the return. Personal representatives must attach to the return a copy of the court certificate showing the appointment.

If you are a surviving spouse filing a joint return you should sign the return and write in the signature area, "Filing as surviving spouse".  If no personal representative has been appointed and there is no surviving spouse, the person in charge of the decedent's property must file and sign the return as "personal representative."

Form 1041 - U.S. Income Tax Return for Estates and Trusts

Upon death, income that would have been attributable to the decedent is now income to the decedent's estate and reported on the estate's income tax return.  A return must be filed if the estate has gross income of $600 or more.

This is the income tax return of the estate.  It is used to report income on the assets in the estate, including sales of property.

The estate exists until final distribution of all assets.

Form 706 - United States Estate (and Generation Skipping Transfer) Tax Return.

Estate Tax

Estate tax may apply to your taxable estate at your death. Your taxable estate is your gross estate less allowable deductions.

Your gross estate includes:

• Life insurance proceeds payable to your estate or, if you owned the policy, to your heirs.
• The value of all property in which you had an interest at the time of death.
• The value of certain annuities payable to your estate or your heirs.
• The value of certain property you transferred within 3 years before your death.
• Trusts or other interests established by you or others in which you have certain powers.

Taxable Estate

The allowable deductions used in determining your taxable estate include:

1) Funeral expenses paid out of your estate,
2) Debts you owed at the time of death, and
3) The marital deduction (generally, the value of the property that passes from your estate to your surviving spouse).

For more information regarding this topic, please call our office with any questions and or concerns.