It's a tough time when having to wind down a deceased spouse's affairs. Their taxes still have to be taken care of, even though they're gone. It must also be proven to the IRS that the person is now deceased, adding another layer of paperwork on to the task.
Representing the Estate
The decedent's property has now become an estate, administered by a executor or administrator. This role is usually played by the surviving spouse. If there has no one named as administrator, the job then falls to the surviving heir. Acquire an employer identification number for the estate as opposed to using the social security number. An EIN can be obtained at www.irs.gov/businesses. This is solely for the use of the estate and will be used for all tax paperwork.
Required Information for the 1040
Write the word "deceased," name of the decedent and the date that they died on the top of the form. Enter the living and deceased spouse's name and address into the address space. When calculating the adjusted gross income, include only the income up to the last date that any monies were received. Sign the form with your name and sign as a proxy for the decedent.
There is no need to attach a death certificate to the return. Keep a copy in the case it may be requested at a later date. A surviving spouse also does not need to fill out any other forms to receive the refund for the deceased spouse.
Reporting Income
There are two different types of accounting methods used for income, cash and accrual. Cash generally refers to income that was earned and paid on a regular basis. If the decedent passed before their last paycheck was issued, the monies earned are still considered cash. Accrual is for those who state their income when they earned it, but not received. For example, a pay period may close out on a certain date, but a check will not be issued for weeks, or even months. This method also applies to interest and dividend income, which becomes more complicated. Check records and previous years tax returns if there's uncertainty.
Using Legal Assistance
The more complicated the estate, the more complicated the tax paperwork. Hiring a tax lawyer for these types of situations is the best option. It's important to close out the estate of the deceased spouse as cleanly as possible, with little to no hassle involved. An estate or tax lawyer will have the know-how on what's necessary to keep all government entities satisfied and to help you move your life forward.
