The attorneys at Sinclair Prosser Gasior can guide you through the many duties you have as trustee or personal representative when settling an estate. One of the duties of the trustee and/or personal representative of an estate is to make sure that all income tax returns have been filed for the decedent. This includes filing the final income tax return. Even though a person is no longer living, any income earned prior to their death must be reported to the IRS on the final income tax return. The form used to file the return is the same form used during life, typically the IRS form 1040. The final state income tax return also needs to be filed.
The deadline is the same for filing the final income tax return, usually April 15th of the year following death. So, let’s say a person passed away in January 2021 and had income during the month, then by April 15, 2022 the final income tax return needs to be filed or an extension needs to be filed. The filing of the income tax return can sometimes hold up the closing of the estate. If all assets have been valued, property has been sold and all bills paid, and the trustee is ready to make distribution, the trustee would be prudent to wait until the final income tax return is filed to close out the estate and make the distribution to the beneficiaries.
If a decedent was married, the widow or widower may file a joint return. Let’s say that the decedent was married but the spouse is not the executor or trustee, then it is the executor’s responsibility to make sure that the final income tax return is filed. Even though it may be filed by the surviving spouse the executor should verify the filing occurred.
If there is money owed for income taxes then the trustee or the executor must make the payment from the estate. If there is a refund then the trustee or the executor must claim the refund. In order to claim the refund an IRS form 1310 must be filed with the final return. Many people think that they must open a probate to request the tax refund, however form 1310 allows the IRS to pay the refund to the trustee rather than the executor therefore avoiding the need for probate.
Hiring an attorney to assist you with the settling of an estate will provide you peace of mind knowing that you have carried out all the responsibilities as trustee and/or personal representative, including filing the final income tax return. The attorneys at Sinclair Prosser Gasior will provide personalized help and support as you work through the estate settlement process. Contact us today!