A final income tax return must be filed for a decedent if they met the filing requirements at the time of death. If death occurs during filing season and the prior‑year return has not yet been filed, the normal filing deadline still applies. The person responsible for filing may be a surviving spouse, relative, executor, administrator, or other representative.
The final return is due when it would have been due had the individual lived for the entire year. For a calendar‑year taxpayer, this is typically April 15 of the year following death.
Filing Status Rules
If married at the time of death, the decedent and surviving spouse are treated as married for the entire year.
- A surviving spouse who does not remarry may file a joint return with the decedent.
- If the surviving spouse remarries, they cannot file jointly with the decedent. The decedent must file MFS, while the surviving spouse may file jointly with the new spouse.
- A court‑appointed representative may revoke a joint return filed by the surviving spouse by filing a separate return for the decedent within one year of the due date.
Income to Include
Income on the final return is determined as if the decedent were still alive, except the tax year ends on the date of death.
Cash Method
Include amounts actually or constructively received before death.
Examples:
- Interest from matured bond coupons is included if the coupons matured before death.
- Dividends are included only if available for use before death. If the check arrives after death, it is not included.
Accrual Method
Include only income normally accrued before death.
Income in Respect of a Decedent (IRD)
Income the decedent would have received had death not occurred, but which is not included on the final return, is IRD.
IRD is taxable to:
- The estate
- The beneficiary who receives the right to the income
- Any person to whom the estate distributes the right
The character of IRD remains the same as it would have been to the decedent.
Medical Expense Deductions
Medical expenses may be handled in two ways:
- Paid before death: deductible on the final return if itemized.
- Paid by the estate within one year after death: the executor may elect to treat them as if paid by the decedent, allowing deduction on the final return instead of the estate’s return.
This election applies to expenses for the decedent, spouse, or dependents.
Loss Deductions
Only the final return may claim:
- Net operating loss carryovers
- Capital losses and capital loss carryovers
Unused losses cannot be deducted on the estate’s return.
Credits
Any credits the decedent qualified for before death may be claimed on the final return, including credits that normally require a full 12‑month year.
Signing the Return
Signature rules depend on who is responsible:
- Court‑appointed representative: must sign.
- Joint return: surviving spouse must also sign.
- No representative: surviving spouse signs “Filing as surviving spouse.”
- No spouse and no representative: the person managing the decedent’s property signs as “personal representative.”
A surviving spouse filing jointly may also submit a refund claim.
A notation should be placed at the top of the return: “DECEASED – [Name] – [Date of Death]”