Final 1040 Tax Filing After Death
It is the duty of the executor to assume responsibility for filing the decedent’s tax issues as mentioned in the will. However in the absence of a will then a probate court will appoint an administrator. Whatever route is adopted, the duties of an executer are essentially the same.
His job is to identify the estate’s assets, pay off the debts and distribute the remaining estate to the rightful heirs and beneficiaries. He is also required to file necessary tax returns and pay taxes.
The first step in filing returns is to file the decedent’s taxes for the year for his death. The final 1040 covers the period from 1 of January through to the date of death. The return is due on the standard date which is the 15 of April. If the decedent was unmarried, the final 1040 is prepared in the usual fashion. When there is a surviving spouse, the final 1040 can be a joint return filed as if the decedent were still alive as of the year end which includes the decedent’s income and deduction up to the time of death plus the surviving spouse’s income and deductions for the entire year.
In case of large medical expenses accrued during the year but not paid before death, the executor must make a choice about how they’re treated for tax purposes. Along with the medical expenses paid before death, the executor can choose to deduct the unpaid portion of the expenses on the decedent’s final 1040 to the extent they exceed 7.5 percent of adjusted gross income. This is in exception to the general rule that expenses must be paid in cash before they can be deducted. If the estate is subject to the federal estate tax, the accrued medical expenses can be deducted on the decedent’s federal estate tax return.
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