After a loved one passes away someone has to file a final tax return with the IRS. It is more complicated than filing your own returns.
The IRS does not forgive any tax on the income a person makes during the final tax year of his or her life. Taxes are owned on all the income the decedent made between Jan. 1 of that year and the date of death. That means someone has to file an income tax return.
US News & World Report recently explained how to do that in "How to File Final Taxes for a Deceased Loved One."
The article mentions three important things to keep in mind:
- Authority – Not just anyone can file the final tax return. It needs to be done by an authorized representative who has been given the authority by a probate court. Normally, this will be the executor, administrator or personal representative.
- Professional Help – Filing someone else's taxes is more difficult than filing your own. You might know everything about how your finances are arranged, but do not assume you know the same about someone else's finances. Seek out assistance from a tax professional.
- Paperwork – Filing a person's final tax return takes a lot of paperwork. You will need a death certificate as well as documentation of the person's finances.
If a loved one has passed away, it is a good idea to visit an estate attorney to get assistance with getting the proper authority to file a final tax return and gathering all of the necessary documentation.
Reference: US News & World Report (April 22, 2016) "How to File Final Taxes for a Deceased Loved One."