Decedent Tax Returns

A final tax return is filed for an individual in the year of his/her death[i].  A final return means the decedent’s federal individual income tax return for the year of death.  A decedent’s final income tax return includes income and deductions through the date of death.  The preparation of a decedent’s final federal income tax return is the responsibility of a personal representative.  A personal representative of an estate can be an executor, administrator or anyone who is in charge of a decedent’s property[ii].  The filing requirements that apply to individuals will determine whether a final individual income tax return is required for the decedent or not.  The method of accounting determines whether income must be included or deductions made on the final return.  The cash method is commonly used for accounting.  In the cash method, the final return shows the items of income received by a decedent that were credited to his/her account.  It also shows the items that were made available to the decedent without restriction before death.  Generally, expenses which a decedent paid before death should be deducted on the final return.  Usually, a personal representative signs the return.  When a joint return is filed, the surviving spouse also must sign the return.

A joint return may be filed for a decedent and his/her surviving spouse as long as the surviving spouse has not remarried at the end of the year of death and the personal representative and surviving spouse both agree to file a joint return.  A decedent and his/her surviving spouse have a separate interest, rather than a joint interest, in any tax liability or refund.  The tax liability on a joint return is allocated to a decedent based on his relative separate tax liability.  Where there is no personal representative and a surviving spouse, the person in charge of a decedent’s property must file and sign the return as a personal representative.

Moreover, income received after death should be reported on the estate income tax return.  The return of a decedent is a return for the short period beginning with the first day of the decedent’s last tax year and ending with the day of death.  However, the filing of a return and the payment of taxes for a decedent may be made as though the decedent had lived to the end of his/her last tax year[iii].  A decedent’s tax year ends on the date of death.  However, the actual due date of the final return is April 15th of the year following a decedent’s death.

[i] 26 USCS § 6072

[ii] 26 USCS § 6012

[iii] 26 CFR 1.443-1

Inside Decedent Tax Returns