If you are the beneficiary of a deceased family member's estate, you will have to handle their taxes after their death. So, you will know what to do, below is some information that you should find helpful. This will help everything go much smoother for you.
File Trust Tax Return
If your family member's estate is worth more than $600 or your family member is not a US citizen, you will have to file a trust tax return. The trust is Form 1041, which you can download and print from the IRS website or through a tax professional. If you are not sure if you need to file one, contact a professional to see if you do. This is important, because you are the beneficiary and it is up to you to ensure everything is filed. You do not want to have to deal with tax problems during this difficult time.
File Taxes for Deceased
If your family member died before they could file a tax return, it will be up to you to do this for them. This is because you are in charge of their estate and are the beneficiary. If your family member owed taxes, you must pay them to the IRS on time. If your family member did not owe any taxes, then you will get a refund when you file their tax return. As the executor of their property, this refund will be sent to you in your name.
When someone files the tax return it must have the word deceased somewhere on the return, as well as show the person's date of death and their full name.
File Two Returns
In some cases, you may have to file two tax returns: A form 1040 and form 1041. This would be true if your deceased family member earned an income in the same year they died, such as through sale of assets, dividends, or interest. The form 1040 tax return would be for the time the family member was alive, and the 1041 is the taxes they either have to pay or can get a refund after their death.
Dealing with taxes for a deceased family member can be very confusing for someone that is not knowledgeable with filing taxes. For this reason, hire a tax professional to do this for you. They can ensure everything is filed correctly so you will not have problems.
