Do I Have to Pay a Deceased Relative's Taxes?

The loss of a loved one can be difficult. Aside from that, managing their cash takes a lot of work.

The IRS does not require relatives of the deceased to make tax or penalty payments on their behalf. Yet, several guidelines can be applicable if someone has passed away and still has unpaid income or estate taxes.

Typically, the final tax return for a deceased person is filed by their surviving spouse or another designated agent. The surviving spouse must sign the return.

The person filing the return must be either a court-designated conservator or guardian or a power of attorney if there is no surviving spouse or assigned representative. IRS Form 2848: Power of Attorney and Declaration of Representation must be completed by the person filing the return in all scenarios.

Using software that handles many of the most challenging portions of the tax return automatically is the ideal method to submit a tax return on your parent's behalf. Free tax preparation software is available online at H&R Block and TurboTax. Alternatively, you might pay a tax expert to draft your return.

An estate must submit a final tax return on behalf of a deceased relative. Usually, this duty rests with the executor or administrator of the estate, but a surviving spouse who is filing jointly may take on this duty.

A deceased person's income and expenses for the year of death must also be disclosed. This includes income accumulated or earned after the death and payment received the year before.

Yet, how a decedent paid their taxes affects the income recorded on their final return. Only income earned in the tax year before death would be included on the return if the taxpayer used the cash method.

All income earned between the end of one tax year and the start of the next would be recorded on the final return if the decedent employed the accrual method. Hence, any income earned in the year before death will be subject to estate taxation, while any income produced following the date of death will be subject to beneficiary taxation.

You might be able to set up a payment plan if you find out about a deceased loved one's tax obligation after their passing. This kind of agreement is comparable to a credit card or auto loan in that you can make incremental payments over time to pay off the balance.

Although you won't be responsible for any debt, you must know the IRS's policies before creating a payment schedule. You'll need to be mindful of the proper filing dates and procedures, as well as how to obtain any necessary funds from the estate and submit claims for refunds that are owed. Leave this complicated task to the professionals as it is recommended. Receiving sound counsel will spare you and your family from pointless troubles and headaches after death. The last thing you want is to have to handle other matters about your loved one's estate, such as an overdue tax payment.

Finding and tracking financial counselors, brokers, and insurance firms can be facilitated by using a loved one's tax return as a beneficial resource. Also, it's crucial to get in touch with these parties to advise them of the death and start closing any outstanding accounts.

If a return is owed, you can ask the IRS to send a new check to the appropriate party by submitting Form 1310, Statement of Person Claiming Refund Due to Dead Taxpayer. If the deceased's refund check is in their name, the surviving spouse must complete this form; if it is in their name, the court-appointed personal representative of the estate must complete it.

If the first check's value was less than $1,000, Section 3 must be filled out. You must affix an original review and a copy of the decedent's death certificate to the affidavit, depending on the box you checked on Line A or B. Then, you'll be able to get any refunds that could be owed.