Death does not prevent a person from owing taxes — or from needing to have tax returns filed on their behalf. If a spouse, partner, parent or dependent earned income prior to their death that was not reported to the IRS, you may need to take the responsibility of completing their final tax return and ensuring any remaining taxes are paid.
We always recommend working with a CPA or tax professional, especially when dealing with complicated tax issues such as estate tax and inheritance tax. If you are currently filing taxes for a deceased person, consider reaching out to an accountant, lawyer or tax specialist to help you through the process. Here’s a quick overview of what you need to know.
What happens if a deceased person owes taxes?
If a deceased person owes taxes, any outstanding tax returns will need to be prepared and filed and any final tax payments will need to be made. This includes both federal and state tax payments, and it also includes not only the tax year in which the person died, but also any previous years in which the deceased did not pay their taxes. If a loved one experienced a prolonged illness, for example, they may not have prioritized tax filing. In that case, you may need to ensure that all outstanding tax returns are filed and any owed balance is paid.
Be aware that not just anyone can file taxes for a deceased person. If you are a surviving spouse of a deceased person and you have previously filed taxes as “married filing jointly,” you can maintain that filing status for the tax year in which your spouse passed away and include both of your income, deductions and credits in the filing.
If the deceased does not have a surviving spouse, a personal representative must take the responsibility of filing any outstanding taxes. This personal representative is generally the person responsible for the deceased’s property, such as an executor or administrator. You might be the personal representative for a deceased parent, for example.
How to file taxes for someone deceased with no estate
Determine whether the deceased’s tax records are current
Before filing taxes for a deceased person, check to see how many outstanding tax returns they might owe. If that information is not in their personal records, the IRS has a guide to help you through the process of requesting previous-year tax information for a deceased person, including sending the IRS a death certificate and proof of your relationship to the deceased.
It’s worth noting that you may be responsible for filing two years’ worth of tax returns on behalf of the deceased person even if their taxes were previously up to date. If the deceased passed away in the first part of the year, for example, they might owe taxes on the previous year as well as the portion of the current year in which they were alive.
Prepare the deceased’s income, deductions and credits
Collect information on the deceased’s income, deductions and applicable tax credits just like you would for your own tax return. The deceased may have W-2 forms or 1099 forms, for example; they may also have assets like stocks that will need to be reported.
If you are the deceased’s beneficiary and received a portion of the income owed them after their death, that income might need to be reported on your tax return instead of the deceased’s tax return. However, there are some situations, especially those involving small businesses, in which the income will need to be reported on the deceased’s tax return even if you received it in respect of a decedent. This is why we always recommend working with a CPA or tax professional to complete your taxes.
File state, federal and local taxes
Once you have collected the appropriate information, it’s time to fill out the various tax forms and file taxes on behalf of the deceased. Depending on where the deceased lived and the type of work they did, you may need to file state, federal, local and/or business taxes on their behalf.
Filing taxes for a deceased person can be as simple as completing a “married filing jointly” form as a surviving spouse, or it can be much more complicated. If you have any questions about the process at any point, consult a CPA or tax professional.
You should also consider the deceased person’s effect on your own taxes. Surviving spouses are entitled to their own tax benefits, such as special tax rates. If you are filing taxes on behalf of a deceased person who was also your dependent, you’ll be able to claim the dependent on your tax return during the year of their death, even if they died early in the year.
Pay any taxes owed and/or collect any refunds
After the tax returns are complete, you will need to ensure that any outstanding taxes are paid and any refunds go to the right beneficiary.
If you are a surviving spouse completing a “married filing jointly” return, you’ll pay your taxes and/or receive your refund as usual. Make sure to note that your spouse is deceased when you file your tax forms. If you receive a refund check in both your and your spouse’s name, you can void the check and return it to the IRS along with Form 1310 (Statement of a Person Claiming Refund Due a Deceased Taxpayer) and a written request for a reissued check in your name.
If you are an appointed or certified personal representative of the deceased, you may need to pay taxes on the deceased’s behalf. If you cannot afford to pay those taxes, the IRS can help you set up a payment plan. To claim a refund as the personal representative of a deceased person, attach a court certificate showing your appointment to the tax return. If you are filing an amended return and have already sent the court certificate to the IRS, submit Form 1310 with the deceased person’s tax return to collect any refund owed.
Possible taxes due after someone’s death
A deceased person may owe any or all of the following taxes:
- Federal tax
- State tax
- Local/city tax
- Business tax
- Self-employment tax
- Gift tax
- Estate tax
- Generation-skipping transfer tax
Many deceased people will only owe federal and state taxes on income earned from traditional employment, making their tax returns relatively easy to complete. However, some deceased people may have much more complicated tax situations. A good tax professional will be able to anticipate your questions, provide qualified and up-to-date advice and help you through what can often be a difficult and emotional process.
What to do when there’s an estate involved
The majority of deceased persons will not owe estate tax. In 2020, the gross value of an estate must exceed $11,580,000 before estate taxes kick in. If a deceased person’s estate is at or below this filing threshold, it is unlikely that estate taxes will need to be filed. There is an exception if the estate elects to transfer any deceased spousal unused exclusion (DSUE) amount to a surviving spouse; in that case, you’ll need to file an estate tax return regardless of the size of the estate.
As always, consult with a lawyer, CPA or tax professional if you have any questions about estate tax — or whether your loved one’s estate is subject to any other kind of tax, like gift tax on a recent financial gift to a child or grandchild.