Final Return for Decedent

What Is a Final Return for Decedent?

A final return for decedent is an income tax return that has been filed for an individual in the year of that taxpayer's death. Taxpayers who die in any given year must have one final tax return submitted to the IRS on their behalf to account for any income or transfers received in that year. A copy of the official death certificate must be attached to the return for it to be processed.

Key Takeaways

  • A final return for decedent refers to a tax return filed for an individual in the year of that person's death.
  • Typically, the surviving spouse or person appointed by the courts to administer affairs relating to the deceased person's estate is responsible for signing tax forms.
  • In the same manner, the executor of an estate or a surviving spouse can claim refunds owed by the IRS to the deceased.

Understanding Final Returns for Decedent

In order to properly file a final return for decedent, the executor of the individual's estate or a personal representative is usually responsible for filing that tax return. This personal representative may be the deceased spouse or another family member, or their accountant if they had one at the time of death. This return pertains solely to income taxes and should not be confused with an estate tax return. Income that is received after the taxpayer's death would also be reported on this return.

This final return is typically prepared in much the same way as when the deceased person was alive, according to the IRS. Any income earned that filing year should be noted on the Form 1040, or, if applicable, 1040-A or 1040-EZ, along with any credits or deductions to which they may be entitled.

If the decedent’s final return shows that tax is due, their executor or representative should submit a payment via check, debit card, credit card, or electronic funds transfer. As with normal returns, the filer may qualify for certain payment plans or installment agreements, say IRS officials. If the decedent is owed a refund for individual income tax, the executor may claim it using IRS Form 1310, known formally as the Statement of a Person Claiming Refund Due a Deceased Taxpayer.

Other Advice for Filing a Final Return for Decedent

As the Tax Adviser website points out, even if the filing of a final decedent's final return may be unfamiliar or uncomfortable for some tax preparers, it is "better to take control of the situation and make the final Form 1040 a powerful and effective part of the post-mortem planning process."

Among the many points of advice offered by Karen S. Cohen, CPA, she noted that practitioners should first be sure to stop making estimated tax payments: "Once a taxpayer dies, they are no longer required to make estimated tax payments. Many well-meaning family members continue to submit the decedent’s quarterly estimated tax vouchers, which is not necessary and may require taking funds out of an investment portfolio, where they could otherwise be growing and earning income for as long as a year," Cohen wrote.

As for the question of who should sign the return, she said: "A surviving spouse filing a joint return need not do anything special. They will just sign as the surviving spouse. If someone other than a surviving spouse has been appointed by a court to administer the decedent’s affairs, that executor or personal representative should sign the return and attach a copy of the certificate that shows the official appointment."

Relatedly, a spouse can still file a joint return with a decedent for the year of death, said Cohen, but noted that, "if the decedent incurred significant medical expenses during their last illness and passed away early enough in the year to be reporting substantially less income, consider filing separately if it would save tax by allowing medical expenses to exceed the adjusted gross income threshold for deduction and create a better overall result for the surviving spouse and family."

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