Understanding Tax Services

Death And Income Taxes—How To File A Final Return For Your Loved One

Dealing with the death of a loved one is a difficult time. Unfortunately, those emotional hard times can be exacerbated when you also have to handle the legalities of your deceased family member or friend. One such legal requirement many have to take care of is filing taxes for someone they've lost.

The good news is that it may be simpler than you realize to file for a deceased person and handle their final taxes. Here is a quick guide to doing so.

Who Should File

If the deceased person was married, the surviving spouse should usually file a tax return as Married Filing Jointly. If no representative was appointed by the court, the spouse would file the return as normal and write "Filing as Surviving Spouse" in the place where the other would have signed the return.

If no representative is designated and the decedent was single, a "person in charge of the decedent's property" may file the final return. This person—usually an informal designation— can claim this responsibility by filling out and attaching Form 1310. They would then sign the return "Personal Representative."

How to File

Filing as a married couple means that most of your tax return will be similar to what it would have been had both partners survived. Deductions continue to be allowed as normal, as do the standard deduction and personal exemptions. The Earned Income Credit is refundable on a deceased person's return and is based on the partial income of the decedent (if applicable).

Whether you sign the return as a surviving spouse or a representative, write the word, "DECEASED" on the top of Form 1040 along with the date of death.

If the person's estate exceeds the estate tax exclusion of $5,450,000 (in 2016), you are likely to need to file an Estate Tax Return. This is done with Form 706

When to Get Help

If the person's estate falls into one of the following categories, it may be best to work with a qualified tax accountant, CPA or tax attorney. Such times include:

  • Anyone with minor heirs or beneficiaries

  • Married couples whose estates exceed the estate tax exclusion

  • Family businesses or farms

  • Probate estates distributing assets

If your spouse or family member had a simple tax situation and a small estate, you can likely complete the final tax return on your own. However, if you're unsure about how to do it or feel that it may be too emotionally difficult, don't hesitate to get help. For more information, consider contacting companies like Capital Accounting And Tax Service Inc.