There are a lot of things that need to be handled when a person passes away. One that’s sometimes overlooked is the need to file the decedent’s final federal income tax return. Death doesn’t automatically cancel their obligation to the federal government.
If a final income tax return isn’t filed, the effects can impact the estate. The Internal Revenue Service can place claims against the estate, which can mean that beneficiaries and heirs don’t receive their inheritance in a timely manner. Fees, interest and penalties may chip away at the inheritance they ultimately receive.
How is the federal income tax return filed?
The executor of the estate is responsible for making sure the income tax return is filed. It covers from January 1 of the year the person died through the date of their death. The return must be filed by the deadline for that specific tax year, which is typically April 15.
There’s also a chance that the estate will need to file a federal tax return. This applies to estates valued over $13.61 million, as of the 2025 tax year. Estates that are under that threshold don’t have to worry about federal estate taxes.
Handling all the financial affairs of the estate, including federal tax obligations, must be completed before the estate can be closed out. Serious consequences can occur if that doesn’t happen. Anyone who is concerned that there might be problems with the tax situation for a specific estate should work with someone who understands federal tax law and can help them navigate through the situation.