When someone passes away during the most recent tax year, the person named as executor in the will (or if there is no will, the administrator of the estate appointed by the court) is responsible for filing all necessary income, estate and gift tax returns in the decedent's name.
The executor determines what income was received by the decedent prior to the date of death and that income will need to be reported on a personal income tax return (Form 1040). Write the word “deceased” across the top of this tax return along with the decedent’s name and date of death. This personal return should be filed by the same due date that it would normally be due if the person were still alive.
Any income over $600 received by the decedent after passing away will need to be reported on the tax return for the estate (Form 1041). To begin creating the estate tax return, the executor must first apply for an employer identification number that will be used to reference all tax documents relating to the decedent's estate. The EIN is only used to file a final tax return for the estate of the person who passed away and should not be used to file returns or make payments for any year prior to the year when the person died.
A few finer points to keep in mind:
For more information, consult this IRS publication or contact the experienced estate administration attorneys at Stouffer Legal in the greater Baltimore area.