While I am not a CPA or tax attorney, I am often confronted with tax matters in my estate planning and estate administration practice. In this blog, I will focus on filing any outstanding federal and state income tax returns for a deceased individual. As a disclaimer, this blog should not be taken to provide tax advice and is intended only as general information on the types of returns and appropriate parties to sign. Information in this blog is gathered and, in some places, quoted directly from irs.gov. Consultation with a CPA is highly encouraged before any filing decisions or submission of returns.
First, no matter the type or size of an estate, the individual federal (Form 1040) and state income tax requirements for a deceased person need to be addressed by a family member or by the court-appointed personal representative for the estate. Even in cases where there is a surviving spouse who was accustomed to filing jointly, if there is a court-appointed personal representative for the estate, both the surviving spouse and the personal representative must sign the joint return. If there is not a court-appointed representative, the surviving spouse filing a joint return should sign the return and write in the signature area labeled, filing as surviving spouse. If there’s no court-appointed representative and no surviving spouse, the person in charge of the deceased person’s property must file and sign the return as “personal representative.” If there is no court-appointed personal representative, the person filing must submit Form 1310 (Statement of Person Claiming Refund Due a Deceased Taxpayer) if a refund is owed to the decedent.
There may be cases where a person filing a tax return for a decedent does not have necessary income information such as W-2s, 1099s, prior tax returns and the like. If such is the case, a court-appointed personal representative may be necessary and the personal representative will need to file Form 56 (Notice Concerning Fiduciary Relationship) to notify the IRS of the existence of a fiduciary relationship. A fiduciary (trustee, executor, administrator, receiver, or guardian) stands in the position of a taxpayer. After processed, the fiduciary can request prior tax return transcripts and other pertinent tax info directly from the IRS. Form 56 should also be filed to notify the IRS if your fiduciary relationship is terminated or when a successor fiduciary is appointed if the estate has not been terminated. At the time of termination of the fiduciary relationship, you may want to file Form 4810 (Request for Prompt Assessment) and Form 5495 (Request for Discharge From Personal Liability) to wind up your duties as fiduciary.
As the personal representative for the decedent’s estate, you are responsible for any additional taxes that may be due. You can request prompt assessment of any of the decedent’s taxes for any years for which the statutory period for assessment is open. This applies even though the returns were filed before the decedent’s death. An executor can make a request for discharge from personal liability for a decedent’s income, gift, and estate taxes. The request must be made after the returns for those taxes are filed. To make the request, file Form 5495. Within 9 months after receipt of the request, the IRS will notify the executor of the amount of taxes due. If this amount is paid, the executor will be discharged from personal liability for any future deficiencies. If the IRS has not notified the executor at the end of the 9-month period, the executor will be discharged from personal liabilities.
If you are a court-appointed personal representative for an estate or otherwise winding up the affairs of a deceased individual, you need to assemble your “board of advisors” which should, at a minimum, include an attorney and CPA. We can help so please call our office to speak with an estate administration attorney.