Business and Management

Filing a Last Income Tax Return For a Deceased Family Member

Filing a final income tax return for the year a relative is due presents several unique and strict tax rules. Whenever someone dies, they are known as the "deceased." The final income tax return of the deceased includes deductions and income throughout the date of death. You can also take best advice from income tax advisors via .

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The goal of this guide is to highlight some of the exceptional tax rules that household members should be aware of.

Summary of Tax Estimates:

1. Fiscal Year: Although the decedent's fiscal year ends on the date of departure, the actual expiration date of the final return is April 15 of the following year;

2. Marital status for return purposes: a joint return may be filed for a deceased and his or her surviving spouse as long as the surviving spouse has not remarried at the end of the year of departure and the personal representative and the living spouse agree to file a joint statement;

3. Income concerning the deceased: Earnings accrued, but pending, as of the date of death are known as "income concerning the deceased" (IRD). The IRD is excluded from the final income tax return of the deceased. This income is generally included on the decedent's real estate tax return (Form 1041);

4. Medical expenses: clinical costs paid into the decedent's estate within one year of their day after the date of departure can be deducted on the final tax return (Schedule A) or the estate tax filing (Form 706);

The loss of unused passive activity is allowed on the last tax return to the extent that it would have been allowed if the household member had not died. Any loss of unused passive activity not allowed on the last income tax return perishes unused on the approval date.