So it is obvious we are not going to have the documents needed to complete my father’s taxes (passed away on 12/8/2021). I guess I’m supposed to file an extension. Do I just guess on the various questions such as expected refund/taxes owed?
I think in most years he gets a refund but with his health issues last year I’m not sure he made his usual tax payments. Although this isn’t the right attitude to have, I think both my brother and I are tired and worn down dealing with the various estate issues and just want to move on and figure there isn’t much they can do since he is no longer alive.
Right now we are (again) waiting on Vanguard to send a 1099. Since they locked down his account we can’t download them (not saying they shouldn’t have but it be easier). I’m thinking just look at his checkbook and do a best guess from what ever documents we have and what he did the previous year and if the IRS or the state doesn’t like it, they can let us know.
Is there some kind of form you can send the IRS telling them he has passed away? The only thing I saw was to send them a copy of the death certificate when you file the return.
It is a very difficult time. Several years ago, my sister passed away in December. It does complicate taxes and many other things. I fully understand being tired. Just take care of yourself. I let it overwhelm me and it resulted in a fractured arm from a fall.
We haven’t needed to submit a death certificate to file the final tax returns though sending a death certificate to the IRS and state may help avoid tax identity theft. Marking the return as deceased and including the date of death was sufficient.
Remember that the personal tax return ended on the date of death and the estate income tax return starts the following day. What can be complicated and take time if there is no trust is having the estate administrator appointed to by the court.
Filing an extension would be reasonable. After making an estimate of what he paid you have two choices 1.) Estimate that no additional income taxes are due and accept the penalties involved. 2.) If it appears he is significantly underwithheld, make a payment based on your best estimated of past taxes paid.
In 2021, many investments had large distributions in December. You will need to look at the detail in the 1099 to determine how much of the income falls to the individual return or the estate return. Given the stress you are under, having some professional help with the tax returns may be helpful. The estate may choose a fiscal or calendar year.
Do I just guess on the various questions such as expected refund/taxes owed?
Yep. Pretty much.
The extension request, Form 4868, only asks for two items: How much you think you’ll owe, and how much you think has been paid in already through withholding and/or estimated tax payments. They don’t really care how you get to those estimated amounts. If the amount paid is smaller than the amount owed, you need to pay the difference with the extension request.
If, when the return is actually filed, you have not paid in at least 90% of the taxes owed by the original due date - including any payment with the extension - the IRS can treat the extension as invalid. That has two impacts: certain elections that must be made on a timely filed return won’t be allowed, and you will be penalized for late filing of the return.
In my experience, this is rarely enforced. And you can always argue that you were doing the best you could with the info you had available to you.
In short, unless you’re dealing with multiple hundreds of thousands of dollars of income, make a couple of educated guesses and file the extension, with payment as indicated by your guesses. There probably more important ways to spend your time and energy.
I’m sorry for your loss. This can be a very trying time. I know, as my mother passed away mid-December nearly thirty years ago.
Right now we are (again) waiting on Vanguard to send a 1099. Since they locked down his account we can’t download them (not saying they shouldn’t have but it be easier). I’m thinking just look at his checkbook and do a best guess from what ever documents we have and what he did the previous year and if the IRS or the state doesn’t like it, they can let us know.
In the bad, old days, (before 1996), you had to sign the extension request under penalties of perjury. The 4868 extension application was only provisionally automatic, and was only good for four months. It could be revoked if the entries on the form were deemed frivolous. The provision to revoke an extension if the estimated tax liability is inaccurate is still on the books, but I haven’t heard of a case where it happened. I would just calculate an estimated tax liability from the third party documents you have in hand, ignore any possible adjustments/deductions/items that aren’t reported to the IRS on third party documents and use that for the liability. Enter whatever you know was paid (via withholding/estimates, etc.) and don’t worry any further.
Is there some kind of form you can send the IRS telling them he has passed away?
Not a tax expert, just a kindred soul going through the same process.
If you haven’t already, you should file IRS Form 56 – Notice Concerning Fiduciary Relationship. This identifies you as the person responsible for your father’s taxes. This will allow you to speak with the IRS concerning any taxes filed with your father’s social security number.
I assume you have an EIN for the estate? Taxes up to the date of death are filed using the decedent’s social security number (unless there is already a reason such as a trust or business to file using an EIN). Taxes after date of death are filed using the EIN.
Although this isn’t the right attitude to have, I think both my brother and I are tired and worn down dealing with the various estate issues and just want to move on and figure there isn’t much they can do since he is no longer alive.
I can relate to this. I feel your pain. My father died early January of last year and I had similar issues trying to complete his 2020 taxes. I usually do my own taxes with Turbo Tax. I did my father’s taxes with Turbo Tax, realized I was going to need to file by paper because of attaching the court certificate to Form 1310 – Statement of Person Claiming Refund Due a Deceased Taxpayer. (I could have e-filed if I had already submitted the court certificate attached to Form 56 but I had not done so.) I printed out the return from Turbo Tax and copied all of the documentation that I could find and handed it all to an accountant. Her numbers came out the same as mine, but it was money well spent to know that I had handled everything properly.
The estate attorney I am using handled the estate taxes, but I was responsible for the taxes prior to my father’s date of death.
Just keep plugging away. This is a marathon, not a sprint. I am still dealing with the IRS regarding my father’s 2019 tax refund. I was just asked to fax another Form 1310 specific to year 2019 with yet another copy of the court certificate. Evidently there is a 90-day process to retrieve archived documents at the IRS, so be prepared to submit paperwork multiple times if requested.
Do I just guess on the various questions such as expected refund/taxes owed?
I filed an extension to give myself more time to track things down. I never found everything.
When I later filed, I guessed as well as I could on the things I couldn’t obtain (and the accountant agreed that what I did was reasonable). The IRS found and corrected an issue with the return. There were no penalties since a refund was owed. The IRS eventually deposited the refund into the estate account. I received a letter explaining what they caught and fixed. The letter explains what to do if you disagree with their findings.
You can get official records from the IRS for a deceased taxpayer using Form 4506-T. I believe that includes estimated tax payments? If you order them now you should have them in time for the October deadline.