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Filing final tax returns is a key executor responsibility

On Behalf of | Mar 20, 2024 | Estate Administration |

“In this world nothing is certain but death and taxes,” according to Ben Franklin. If you’re the executor of a loved one’s estate, you’re probably thinking about both of these things right now.

One of the many responsibilities of an executor is to file the deceased’s final income tax returns unless they left behind a spouse. If you’re that spouse and the executor of your spouse’s estate (and you’ve been filing joint returns), you can fulfill this obligation with your 2023 or 2024 return (depending on when your spouse passed away). You’ll just need to sign one signature line and write “Filing as surviving spouse” on the other.

If you are filing returns as executor, but aren’t the spouse of the deceased, the IRS requires you to complete the “Notice Concerning Fiduciary Relationship” (Form 56). This is to establish your authority to file the returns.

Make sure you seek an extension

First things first: Maybe with all of your other responsibilities, you haven’t had time to gather the necessary documents to prepare the returns or have them prepared professionally (which is typically the best way to do it). You need to request an extension.

Typically, the IRS grants extensions for the returns of deceased taxpayers. The California Franchise Tax Board (FTB) automatically grants 6-months extensions for filing, but not for payment of taxes due. Therefore, it’s best to contact them or ask your tax preparer about the state tax return.

If the deceased paid a tax professional for their taxes or even did them online, you’ll have an easier time with the returns because you’ll have prior ones for reference. You’ll also want to collect their income documents like 1099s and W-2s and ensure that you have all sources of income (including benefits). If the deceased had considerable medical bills near the end and other potential tax credits, it’s important to know about those. If you need to order copies of documents, you’ll generally need to provide a copy of the death certificate.

Of course everyone’s tax situation is different. If the decedent hadn’t filed returns or paid taxes due for a few years, things will be more complicated. If they didn’t have a tax preparer, it’s smart to get one who’s experienced with filing returns for deceased taxpayers.

It’s important to handle this responsibility carefully, as executors can be held responsible for unpaid taxes. Having sound estate administration guidance can also help things go more smoothly.