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Tax issues after death: How do I file for a loved one?

Navigating the responsibilities that come with closing an estate is not an easy process. In addition to dealing with heirs and creditors the individual in charge of the estate must also deal with the Internal Revenue Service (IRS).

When do I need to file a tax return?

The easier question is often when do I not need to file with the IRS. In most cases, a transfer directly to a spouse does not require a tax filing.

What if I do need to file?

If the IRS requires a tax return for the estate, the individual in charge of the estate, generally referred to as the executor, will likely need to file a Form 1041 the U.S. Income Tax Return for Estates and Trusts. This form is generally due on April 15, like most tax forms. Extensions are available.

Is that all?

Unfortunately, not. Extenuating circumstances can lead to additional requirements. For example, if the estate is valued at more than $11.4 million or significant gifts were given prior to the owner’s passing, the IRS may also require a Form 706 the United States Estate and Generation-Skipping Transfer Tax Return. A significant gift in 2019 is one that is over $15,000 to a single recipient.

A failure to file properly can result in a federal tax audit. Those who receive notice of an audit are wise to act to protect their interests. An attorney experienced in federal tax audit representation can review the notification and provide guidance throughout the process.

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