As we happily turn the calendar to January 2021, many start gathering receipts and documents to prepare for tax season. If you serve or have been recently appointed as a Personal Representative, Executor or Administrator, there are some important income tax issues you should be aware of to avoid legal action from the Internal Revenue Service (“IRS”), or lawsuits from the decedent’s beneficiaries. Below are some answers to a few frequently asked questions concerning estate tax filings:
Q: When is a decedent’s final tax return due?
When someone dies, their tax year ends as of the date of death. The Personal Representative (Executor or Administrator) is responsible for filing the final federal and state returns and ensuring that any tax due is paid. These returns are due April 15 of the year after the date of death. If someone dies before filing a return for the prior year, the Personal Representative must make sure that the return is filed and any taxes paid. The IRS is one creditor you don’t want to mess with, as they can hold a Personal Representative personally liable for unpaid taxes.