IRS Deceased Taxpayer Filing & Other Tax Obligations

IRS deceased taxpayer rules are different than the live taxpayers. So, when your loved one dies, it does not mean that tax compliance with regard to their income or estate stops suddenly. Legal heirs or representatives have to comply with various tax formalities like filing a tax return, reporting death, etc. What needs to be done when a taxpayer dies? As long as the wealth and the estate that generates the income of the deceased person are not legally distributed, it becomes the duty of the legal heirs, executors, estate administrator, or other legal representatives of a deceased person and their estate to comply with the following tasks.

• Change the address for the record.
• Filing tax return
• Managing estate affairs by collecting all assets of the deceased, paying creditors of the estate, and distributing remaining assets among legal heirs as per law.

Who is an executor ? Section 2203 of IRC defines to mean an executor or an administrator of the decedent, or, if there is no executor or administrator appointed, qualified, and acting within the United States, then any person in actual or constructive possession of any property of the decedent.

IRS Deceased Taxpayer Tax Filing?

Section 104 of the Internal Revenue Code lays down rules about the appointment of a personal representative who performs all the legal responsibilities in case of the death of a taxpayer. As per IRC 104.4, a court appoints an executor, administrator, or anyone else in charge of the decedent’s property, or till the court decides, a person named in the will of the deceased person can work as a personal representative of the deceased’s estate. The responsibility to file the tax return of the deceased and also the estate tax return of the deceased is on the said personal representative.

What if a personal representative is not appointed?

If a personal representative (executor or administrator ) to an estate is not appointed or his/her appointment is taking time, any person in actual or constructive possession of any property of the deceased is required to fulfill the obligation of filing a tax return and pay the entire tax to the extent of the value of the property in the individual’s possession.

IRS deceased taxpayer – Who pays the tax debts?

The law fixes the burden of paying the Federal estate tax with respect to the estates of the deceased taxpayer on the personal representative,who maybe the executor or administrator of the decedent’s estate. It must be noted that the executor or administrator must pay the entire tax even if the gross estate consists in part of the property, which does not come within the possession of the executor or administrator. [Refer CFR Rev § 20.2002–1 ]

IRS Deceased Taxpayer – Transcripts & Documents?

There is no special document that one needs for filing the individual income tax return of a deceased person. This is filed the same way you would if the person were alive. But the challenge is to know about all the income up to the date of death. For filing the tax return of a deceased person, you can seek the deceased person’s tax return, tax transcript, payoff information (if they have a balance due), etc.

For getting the transcripts that may help you to file the tax return of a deceased person, you must request IRS with the following documents

• The full name of the deceased, their last address, and Social Security Number
• A copy of the death certificate and
• Either one of the following:
  • A copy of Letters of Testamentary approved by the court or
  • Form 56, Notice Concerning Fiduciary Relationship.Include a copy of any Letters of Testamentary that have been approved by the court.

If you want the tax return of a deceased person, you must pay a fee and file Form 4506, Request for Copy of Tax Return.

IRS Deceased Taxpayer -Apply for Address of Record?

When a personal representative needs to comply with various legal obligations on behalf of a deceased person’s estate, the first thing that is needed is to change the address where he/she will get all the tax notices and letters. This you can do by making requests to IRS by submitting Form 8822, Change of Address and attach your Form 2848, Power of Attorney and Declaration of Representative. Or attach Form 56, Notice Concerning Fiduciary Relationship.

What Are the Tax Filing Deadlines for Deceased Taxpayers?

The estate tax return is due nine months after the date of death. A six-month extension is available if requested prior to the due date, and the estimated correct amount of tax is paid before the due date.

What If the Deceased Taxpayer Owes Back Taxes?

There may be three types of tax dues against the deceased person or his estate. First is estate tax which is paid by the estate only and not by beneficiaries. Second is the Individual or personal income tax, which the estate of the deceased person should pay this tax. The third is the estate income tax which is a tax on income like interest, dividends, capital gains etc after a person has died. 

It may just happen that there are taxes outstanding in the book of the IRS. So, as a representative of the deceased person, it is better that you first find out if there are any outstanding tax debts in the name of a deceased person. You can get the payoff information by visiting the nearest Taxpayer Assistance Center or online payment portal.