The IRA requires that a final tax return be filed after a person dies and there can be complications.
When a person dies the IRS will collect any tax due from the first of the year to the date of death and that requires an income tax return be filed. US News & World Report recently explained how to do that in "How to File Final Taxes for a Deceased Loved One."
The article mentions three important things to keep in mind:
- Authority – Not just anyone can file the final tax return. It needs to be done by an authorized representative who has been given the authority by a probate court. Normally, this will be the executor, administrator or personal representative.
- Professional Help – Filing someone else's taxes is more difficult than filing your own. You might know everything about how your finances are arranged, but do not assume you know the same about someone else's finances. Seek out assistance from a tax professional.
- Paperwork – Filing a person's final tax return takes a lot of paperwork. You will need a death certificate as well as documentation of the person's finances.
An estate planning attorney can guide you through the process of locating the necessary documentation and obtaining the authority to file the return.
Reference: US News & World Report (April 22, 2016) "How to File Final Taxes for a Deceased Loved One."