Is there anything special you have to do filing a final tax return for a deceased person? My father passed away in December. I have his return for the previous year (2020) and it wasn’t too complicated.
His income was basically:
Gains from interest/dividends on his taxable account
Deductions were basic with some charitable contributions.
I noticed he decided to apply most of his federal refund towards taxes in 2021 as well as for the state return.
I did some google searching and I’m supposed to include a copy of the LOA.
It doesn’t sound too bad as long as I can find all of the documents for 2021. I probably could do it either via paper or buy an online tax program.
He didn’t own any property (houses, land, etc.) and didn’t have any strange investments (only a few mutual funds).
If he has a refund coming, you’ll need to include Form 1310 to claim the refund. That requires a copy of the court order appointing you as the executor or administrator of the estate. If there is no court order and there won’t be, there’s a check box for that.
You’ll need to indicate his date of death in the identification area on the top of Form 1040. I’ll defer to the instructions for exactly where to put it.
Another trick is properly identifying to whom certain kinds of income belong. It’s not unusual for interest and dividends to continue to be paid to him rather than to his estate. Technically, those should be separate out and reported on the estate’s income tax return. This often results in a difference between the 1099s issued by the bank or broker and what is reported on his final return. From a practical standpoint, I don’t bother unless the numbers are significant. Two ways that can happen is if the broker or bank wasn’t notified of the death reasonably soon, or there are a lot of dividends or interest paid.
The bulk of the return is the same as if he were still alive.
Pub 559 also says an executor should first file a Form 56 to give “notice of fiduciary responsibility”. See page 3.
The instructions for Form 56 state:
Name. File a separate Form 56 for each person for whom you are acting in a fiduciary capacity. For example, if you will be filing the decedent’s final Form 1040 and are the executor/administrator of the decedent’s estate, file one Form 56 entering the name of the decedent as the person for whom you are acting and file one Form 56 entering the name of the estate as the name of the person for whom you are acting.
So it appears that this is needed before filing the taxes, and a 1040 and Form 1310 would be submitted when filing. Do I read this correctly?
When I called the IRS in July 2021 to discuss a letter my father received regarding his 2019 taxes, the IRS told me I had to file Form 56 in order to discuss anything related to his social security number.
They gave me 2 options for filing the Form 56. I could call in again and, while on the phone with them, fax the Form 56 and court documentation to a special phone number and they would be able to speak to me. The other option was to mail it in. They told me to allow up to 6 weeks before it would be processed. I chose to mail it in and called them 8 weeks later. The paperwork had been successfully processed.
Interestingly enough, the IRS told me I was already authorized to discuss anything associated with his EIN number. Perhaps because I was identified as the executor on the EIN paperwork.
If you do need to call the IRS, be aware there are separate phone queues for taxes/paperwork filed with a social security number vs. taxes/paperwork filed with an EIN. If you call regarding taxes filed under a social security number, do not mention there is an EIN number. The first time I called, I spoke to a representative in the personal income tax group. When I mentioned there was an EIN number, she routed me over to the estates group, who eventually routed me back to the personal income tax group.
The accountant I used filed the Form 1310 with my father’s 2020 1040.
…the IRS told me I had to file Form 56 in order to discuss anything related to his social security number.
Thank your for sharing your experience with this!
It sounds like Form 56 may not be absolutely required to file a return (1040/1310) in this situation, but it may not be a bad idea.
I can confirm that. Form 56 is not required as long as everything goes smoothly. In my case, I filed the 1310 with the 1040. This had to be mailed in by the way. However, the IRS managed to change my name and so the refund check could not be deposited to the estate account. I could not get that resolved until I found out they required the form 56. Ironically, the same information is required for both forms except the 56 doesn’t require the actual court notice just reference to what court and case numbers.
I am still waiting for the corrected refund check after sending it back in Sept. 2021.