What Happens If a Taxpayer Dies?

When someone passes away, their tax obligation does not immediately disappear. Though it is a bit morbid to discuss, the fact is that tax considerations still exist for the part of the tax year when that person was still alive. That means someone must file a final tax return on the deceased person’s behalf.

That responsibility falls to the surviving spouse or representative. Usually, the representative is named in the person’s will or appointed by a court. If there is no surviving spouse or designated representative, a personal representative must file the final tax return.

A personal representative is usually the executor, administrator of the estate, or anyone else in charge of the decedent’s property. The IRS defines the term as anyone filing for a decedent, whether court-appointed or not. It is also worth noting that a personal representative nominated in a will has no authority over estate assets unless appointed by a court.

When there is no probate and no appointed representative, the IRS will allow “a person charged with property of the decedent” to file the decedent’s income tax returns and claim refunds. If there is no surviving spouse, the person who makes this filing is commonly:

• The trustee of the decedent’s revocable trust,
• The personal representative nominated in the will who would have been appointed if probate was required, or
• A beneficiary receiving non-probate assets who undertakes the work.

This individual is responsible for filing any final individual income tax return or returns and the estate tax return of the decedent when due. They may also need to file Form 56, Notice Concerning Fiduciary Relationship, to notify the IRS of the existence of a fiduciary relationship. For more on personal representative responsibilities, refer to Publication 559.

Other duties of a personal representative can include collecting all of the decedent’s property, paying any creditors, and distributing assets to beneficiaries.

Here are a few more notes to keep in mind:

• The IRS considers someone married for the entire year that their husband or wife died if they don’t remarry during the year.
• The surviving spouse can use the filing status “married filing jointly” or “married filing separately.”
• The final tax return for the deceased person is due by the regular April tax deadline unless the surviving spouse or representative attains an extension.
• You may need to include other documents with the return. For example, the court-appointed representative should attach a copy of the court document showing their appointment. Similarly, representatives who are not court-appointed must include Form 1310 to claim any refund.

Lastly, if you are a surviving spouse or representative of a deceased person, you must also note that the person has died on their final tax return. You can do so by writing the word deceased, the deceased person’s name, and the date of death across the top of a paper return. If e-filing, follow the directions provided by the software for the correct signature and notation requirements.

This is the only notification of the death the IRS will need, and it is unnecessary to send a copy of the death certificate or proof of death. Remember that you may also need to notify other agencies, such as the Social Security Administration.