Filing final income taxes is part of an executor’s role

Filing final income taxes is part of an executor’s role

On Behalf of | Dec 30, 2021 | Estate Administration & Probate |

Your loved one has passed away in Washington State, maybe after a long illness. As the executor of the estate, you’ve started gathering all the necessary papers and begun notifying the heirs. Yet, you have one more task to do. You must file a final tax return for the deceased.

The IRS demands a final accounting

The IRS requires someone to file a final tax return to ensure no taxable income falls through the cracks. This task usually falls to the executor of the deceased’s will in addition to other estate administration and probate duties. You’ll file the deceased’s taxes on the same form you normally would but need to put “deceased” after the individual’s name.

Only income from the first of the year until the date of death should be included on this tax return. Earnings after the date of death are taxable to your loved one’s beneficiaries. Earnings reports from some investment accounts can be complicated, so you should try to get the ownership of those accounts changed as soon as possible to avoid confusion. Some investment accounts may not be subject to taxes if you are the beneficiary. Check with an accountant that is experienced with estates to help you if you are unsure or confused.

Personal representative’s role

If you are a designated personal representative for your loved one’s estate, you may also have probate duties to fulfill to locate and help distribute assets to the rightful beneficiaries. You’ll have to notify all beneficiaries of the death to fulfill your role. Dispersal of inherited buildings or property can be particularly difficult as the beneficiaries may have tax consequences.

Uncomplicated estates usually settle within several months of a person’s death. Note that if an estate is large, it could take up to two years to settle it.