Losing a loved one is never easy, and the legal and financial responsibilities that follow can feel overwhelming. One of those responsibilities is filing their final tax returns. If you are an estate executor or personal representative, you may need to handle this process. This guide outlines key tax obligations after a death in San Mateo.
Who Is Responsible for Filing the Taxes?
After someone dies, their tax responsibilities don’t disappear. The executor named in their will typically handles tax filing. If no executor was appointed, a court may designate an administrator. Sometimes, a surviving spouse or another family member must handle the process.
Before filing returns, the responsible party must notify the IRS by submitting Form 56 (Notice Concerning Fiduciary Relationship). This form establishes the individual’s authority to act on behalf of the estate. Without it, the IRS won’t recognize them as the appropriate filer.
Which Tax Returns Need to Be Filed?
Filing taxes for a deceased person involves more than just their final income tax return. In some cases, the estate itself may have tax obligations. Here’s what typically needs to be filed:
1. Final Individual Income Tax Return (Form 1040)
- Covers income earned from January 1 until the date of death.
- Due by April 15 of the following year (or the next business day if it falls on a weekend/holiday).
- If the deceased was married, their spouse may still file jointly for that year.
2. Estate Income Tax Return (Form 1041)
- Required if the estate earns more than $600 in gross income after the person’s death.
- Common sources of estate income include rental properties, interest, dividends, and stock sales.
3. Federal Estate Tax Return (Form 706)
- Applies only if the estate’s total value exceeds the federal exemption amount ($13.61 million in 2024).
- Must be filed within nine months of death, though an extension may be requested.
California-Specific Requirements
California does not impose a state estate tax, but state income taxes apply. If the deceased owed state income taxes, the California Franchise Tax Board (FTB) must receive the final return.
Important Tax Considerations and Deductions
Filing taxes for the deceased isn’t just about reporting income—it also involves determining which deductions or credits apply. Here are some key points to keep in mind:
- Medical Expenses: If the deceased had significant medical bills in their final year, they may be deductible on their return. Unpaid medical bills may also be deducted on the estate’s return.
- Refunds: If a tax refund is due, the IRS requires Form 1310 (Statement of Person Claiming Refund Due a Deceased Taxpayer) to ensure the correct party receives it.
- Charitable Contributions: Any donations made before death remain deductible, and donations from the estate may reduce taxable income.
Every estate is different, and deductions can vary depending on circumstances. Taking time to ensure all eligible deductions are included can prevent overpaying taxes.
San Mateo Estate Planning Attorneys
Managing tax filings for a deceased loved one can be confusing, especially when multiple returns are required. If an estate earns income, has multiple heirs, or involves significant assets, additional tax planning may be needed.
An estate planning attorney can help:
- Ensure all necessary tax returns are filed correctly and on time.
- Identify deductions and credits that could reduce tax liability.
- Handle communication with the IRS or California tax authorities if questions arise.
- Assist with distributing assets in a way that minimizes tax burdens for beneficiaries.
If you are handling a loved one’s estate and need assistance, turn to Loew Law Group. We serve clients throughout San Mateo and the surrounding areas, providing trusted legal support in estate and tax matters. Contact us today to discuss your situation and learn how we can assist.