The last thing on your mind after losing a loved one is likely their taxes.

Losing a loved one is stressful enough; the last thing you should be worrying about is taxes. Plus, filing a deceased’s final tax return can be complicated, which is why we’re here to help.

We’ve outlined everything there is to know about filing a decedent’s final tax return with these five tips below.

1. Determine Who Can File

When a loved one passes, you will need to determine who is responsible for filing their final return. A final return must be filed by either the spouse or the executor. If married, the spouse must also have been a U.S. citizen or resident for the entire tax year. But, if there is no surviving spouse, then the trustee, executor, or administrator is responsible for doing so.

2. You Need the Correct Forms to File

If you are the spouse or executor of the descendant, then you simply fill out the same IRS Form 1040 as you would fill out for a living taxpayer. One key difference is that the final return must also include the date of death and indicate that they are ‘deceased.’

Surviving spouses can also file a joint return in the year of the death and use the ‘married filing jointly status’ (so long as they don’t re-marry during the year).

For those that are not the surviving spouse or executor, you must file Form 56, which states that you are the person responsible for the deceased’s return.

3. Refunds Require Special Forms

If a refund is due, there is another form that will need to be filled out to receive the amount. This is Form 1310, or the ‘Statement of Person Claiming Refund Due to a Deceased Taxpayer.’ But this form only needs to be completed for those not filing jointly. So, if you are a surviving spouse filing a joint return, you can forego this form.

4. You’ll Need to be Careful What You Report

All income up to the date of death needs to be reported. This means that income earned between the beginning of the year, to the date of the death should be reported.

Income for a descendant refers to anything that they had a right to receive at the time of death but is not reported on his or her final return. It’s important to note that this does not include earnings on savings or investments that accrue after death.

Any credits and deductions can also be claimed. Meaning, all deductible expenses paid before death can be written off on the final return.

Additionally, any medical bills paid within one year after death may be claimed. This is because they are treated as having to be paid by the descendent at the time they were incurred. So, the cost of the final medical bills can be deducted on the last return, even if the bills were not paid until after the death.

5. A Death Certificate May be Needed

Some states require a death certificate to be sent along with the tax return. This can easily be checked by speaking with a professional, like us at A.P Accounting and Tax Services, who can quickly research your local laws to ensure a stress-free return. Or clarify what you’ll need by using the IRS’s online information guides which will direct you with what you’ll need.

Ultimately, losing a loved one is a trying enough time as it is. Understanding the tricky tax laws and filing systems can make it more difficult come tax season. That’s why it’s best to partner with a trusted team.

So, you’d be interested in learning more, or knowing what support is available to you, give us a call at 407-328-5001.

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