Death & Taxes

There can be three distinct tax filings, the final 1040 of the deceased, an estate 10401 income return and a form 706 estate return. You are assigned to straighten out the affairs of someone in your family who died. The bank and investment broker no longer do anything to help you. You can be frustrated. Call us. Let’s talk.

Bring in a copy of the death certificate, the prior year tax return and tax papers, the taxpayers birth date, death date and social security number. If there is a will, please bring in a copy of that.

We will file form 56 to name you the responsible fiduciary who will file the tax returns. We’ll file online form SS4 to create an estate with a tax identification number.

We will create a list of bank, investment IRA and pension accounts with the 1-800 phone numbers. The tax id obtained from filing the SS4 and death certificates will be used to convert the accounts over to the estate.

Income earned before the person’s death goes on the person’s individual tax return. If you are the fiduciary on form 56, you can sign that final return.

Income earned after the death of the tax payer is reported on the estate return. This filing uses the tax id that was obtained from filing the SS4.

There is a special rule about savings bond interest. We can work out what best fits your tax situation.

Tax deductions follow the same general rule as the income. Amounts paid before the death are individual tax deductions; after the death expenses might be estate deductions. One exception is a special rule for medical deductions. You have a year to pay the final medical bills and take the deduction on the taxpayer’s return.

IRA’s, Roths, annuities and 401k’s have special treatments that depend on whether the taxpayer was over 65, whether the taxpayer was your spouse and whether the Roth has active for more than five years. We can walk you through what applies to your situation.

We know the process and can help to walk you through each step.

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The Medford Tax Experts, Inc.