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Help with 1040x first time Publication 559 - Main Content Table of Contents Personal RepresentativeDuties Fees Received by Personal Representatives Final Income Tax Return for Decedent—Form 1040Name, Address, and Signature When and Where To File Filing Requirements Income To Include Exemptions and Deductions Credits, Other Taxes, and Payments Tax Forgiveness for Armed Forces Members, Victims of Terrorism, and Astronauts Filing Reminders Other Tax InformationTax Benefits for Survivors Income in Respect of a Decedent Deductions in Respect of a Decedent Estate Tax Deduction Gifts, Insurance, and Inheritances Other Items of Income Income Tax Return of an Estate— Form 1041Filing Requirements Income To Include Exemption and Deductions Credits, Tax, and Payments Name, Address, and Signature When and Where To File Distributions to BeneficiariesIncome That Must Be Distributed Currently Other Amounts Distributed Discharge of a Legal Obligation Character of Distributions How and When To Report Bequest Termination of Estate Estate and Gift TaxesApplicable Credit Amount Gift Tax Estate Tax Generation-Skipping Transfer Tax Comprehensive ExampleFinal Return for Decedent—Form 1040 Income Tax Return of an Estate—Form 1041 How To Get Tax HelpLow Income Taxpayer Clinics Personal Representative A personal representative of an estate is an executor, administrator, or anyone who is in charge of the decedent's property. Help with 1040x first time Generally, an executor (or executrix) is named in a decedent's will to administer the estate and distribute properties as the decedent has directed. Help with 1040x first time An administrator (or administratrix) is usually appointed by the court if no will exists, if no executor was named in the will, or if the named executor cannot or will not serve. Help with 1040x first time In general, an executor and an administrator perform the same duties and have the same responsibilities. Help with 1040x first time For estate tax purposes, if there is no executor or administrator appointed, qualified, and acting within the United States, the term “executor” includes anyone in actual or constructive possession of any property of the decedent. Help with 1040x first time It includes, among others, the decedent's agents and representatives; safe-deposit companies, warehouse companies, and other custodians of property in this country; brokers holding securities of the decedent as collateral; and the debtors of the decedent who are in this country. Help with 1040x first time Duties The primary duties of a personal representative are to collect all the decedent's assets, pay his or her creditors, and distribute the remaining assets to the heirs or other beneficiaries. Help with 1040x first time The personal representative also must perform the following duties. Help with 1040x first time Apply for an employer identification number (EIN) for the estate. Help with 1040x first time File all tax returns, including income, estate and gift tax returns, when due. Help with 1040x first time Pay the tax determined up to the date of discharge from duties. Help with 1040x first time Other duties of the personal representative in federal tax matters are discussed in other sections of this publication. Help with 1040x first time If any beneficiary is a nonresident alien, see Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities, for information on the personal representative's duties as a withholding agent. Help with 1040x first time Penalty. Help with 1040x first time   There is a penalty for failure to file a tax return when due unless the failure is due to reasonable cause. Help with 1040x first time Reliance on an agent (attorney, accountant, etc. Help with 1040x first time ) is not reasonable cause for late filing. Help with 1040x first time It is the personal representative's duty to file the returns for the decedent and the estate when due. Help with 1040x first time Identification number. Help with 1040x first time   The first action you should take if you are the personal representative for the decedent is to apply for an EIN for the estate. Help with 1040x first time You should apply for this number as soon as possible because you need to enter it on returns, statements, and other documents you file concerning the estate. Help with 1040x first time You also must give the number to payers of interest and dividends and other payers who must file a return concerning the estate. Help with 1040x first time   You can get an EIN by applying online at www. Help with 1040x first time irs. Help with 1040x first time gov (click on "Apply for an EIN Online" under the Tools heading). Help with 1040x first time Generally, if you apply online, you will receive your EIN immediately upon completing the application. Help with 1040x first time You can also apply using Form SS-4, Application for Employer Identification Number. Help with 1040x first time Generally, if you apply by mail, it takes about 4 weeks to get your EIN. Help with 1040x first time See the form instructions for other ways to apply. Help with 1040x first time   Payers of interest and dividends report amounts on Forms 1099 using the identification number of the person to whom the account is payable. Help with 1040x first time After a decedent's death, Forms 1099 must reflect the identification number of the estate or beneficiary to whom the amounts are payable. Help with 1040x first time As the personal representative handling the estate, you must furnish this identification number to the payer. Help with 1040x first time For example, if interest is payable to the estate, the estate's EIN must be provided to the payer and used to report the interest on Form 1099-INT, Interest Income. Help with 1040x first time If the interest is payable to a surviving joint owner, the survivor's identification number, such as an SSN or ITIN, must be provided to the payer and used to report the interest. Help with 1040x first time   If the estate or a survivor may receive interest or dividends after you inform the payer of the decedent's death, the payer should give you (or the survivor) a Form W-9, Request for Taxpayer Identification Number and Certification (or a similar substitute form). Help with 1040x first time Complete this form to inform the payer of the estate's (or if completed by the survivor, the survivor's) identification number and return it to the payer. Help with 1040x first time    Do not use the deceased individual's identifying number to file an individual income tax return after the decedent's final tax return. Help with 1040x first time Also do not use it to make estimated tax payments for a tax year after the year of death. Help with 1040x first time Penalty. Help with 1040x first time   If you do not include the EIN or the taxpayer identification number of another person where it is required on a return, statement, or other document, you are liable for a penalty for each failure, unless you can show reasonable cause. Help with 1040x first time You also are liable for a penalty if you do not give the taxpayer identification number of another person when required on a return, statement, or other document. Help with 1040x first time Notice of fiduciary relationship. Help with 1040x first time   The term fiduciary means any person acting for another person. Help with 1040x first time It applies to persons who have positions of trust on behalf of others. Help with 1040x first time A personal representative for a decedent's estate is a fiduciary. Help with 1040x first time Form 56. Help with 1040x first time   If you are appointed to act in a fiduciary capacity for another, you must file a written notice with the IRS stating this. Help with 1040x first time Form 56, Notice Concerning Fiduciary Relationship, is used for this purpose. Help with 1040x first time See the Instructions for Form 56 for filing requirements and other information. Help with 1040x first time   File Form 56 as soon as all the necessary information (including the EIN) is available. Help with 1040x first time It notifies the IRS that you, as the fiduciary, are assuming the powers, rights, duties, and privileges of the decedent. Help with 1040x first time The notice remains in effect until you notify the IRS (by filing another Form 56) that your fiduciary relationship with the estate has terminated. Help with 1040x first time Termination of fiduciary relationship. Help with 1040x first time   Form 56 should also be filed to notify the IRS if your fiduciary relationship is terminated or when a successor fiduciary is appointed if the estate has not been terminated. Help with 1040x first time See Form 56 and its instructions for more information. Help with 1040x first time   At the time of termination of the fiduciary relationship, you may want to file Form 4810, Request for Prompt Assessment Under Internal Revenue Code Section 6501(d), and Form 5495, Request for Discharge From Personal Liability Under Internal Revenue Code Section 2204 or 6905, to wind up your duties as fiduciary. Help with 1040x first time See below for a discussion of these forms. Help with 1040x first time Request for prompt assessment (charge) of tax. Help with 1040x first time   The IRS ordinarily has 3 years from the date an income tax return is filed, or its due date, whichever is later, to charge any additional tax due. Help with 1040x first time However, as a personal representative, you may request a prompt assessment of tax after the return has been filed. Help with 1040x first time This reduces the time for making the assessment to 18 months from the date the written request for prompt assessment was received. Help with 1040x first time This request can be made for any tax return (except the estate tax return) of the decedent or the decedent's estate. Help with 1040x first time This may permit a quicker settlement of the tax liability of the estate and an earlier final distribution of the assets to the beneficiaries. Help with 1040x first time Form 4810. Help with 1040x first time   Form 4810 can be used for making this request. Help with 1040x first time It must be filed separately from any other document. Help with 1040x first time   As the personal representative for the decedent's estate, you are responsible for any additional taxes that may be due. Help with 1040x first time You can request prompt assessment of any of the decedent's taxes (other than federal estate taxes) for any years for which the statutory period for assessment is open. Help with 1040x first time This applies even though the returns were filed before the decedent's death. Help with 1040x first time Failure to report income. Help with 1040x first time   If you or the decedent failed to report substantial amounts of gross income (more than 25% of the gross income reported on the return) or filed a false or fraudulent return, your request for prompt assessment will not shorten the period during which the IRS may assess the additional tax. Help with 1040x first time However, such a request may relieve you of personal liability for the tax if you did not have knowledge of the unpaid tax. Help with 1040x first time Request for discharge from personal liability for tax. Help with 1040x first time   An executor can make a request for discharge from personal liability for a decedent's income, gift, and estate taxes. Help with 1040x first time The request must be made after the returns for those taxes are filed. Help with 1040x first time To make the request, file Form 5495. Help with 1040x first time For this purpose, an executor is an executor or administrator that is appointed, qualified, and acting within the United States. Help with 1040x first time   Within 9 months after receipt of the request, the IRS will notify the executor of the amount of taxes due. Help with 1040x first time If this amount is paid, the executor will be discharged from personal liability for any future deficiencies. Help with 1040x first time If the IRS has not notified the executor, he or she will be discharged from personal liability at the end of the 9-month period. Help with 1040x first time    Even if the executor is discharged from personal liability, the IRS will still be able to assess tax deficiencies against the executor to the extent he or she still has any of the decedent's property. Help with 1040x first time Insolvent estate. Help with 1040x first time   Generally, if a decedent's estate is insufficient to pay all the decedent's debts, the debts due to the United States must be paid first. Help with 1040x first time Both the decedent's federal income tax liabilities at the time of death and the estate's income tax liability are debts due to the United States. Help with 1040x first time The personal representative of an insolvent estate is personally responsible for any tax liability of the decedent or of the estate if he or she had notice of such tax obligations or failed to exercise due care in determining if such obligations existed before distribution of the estate's assets and before being discharged from duties. Help with 1040x first time The extent of such personal responsibility is the amount of any other payments made before paying the debts due to the United States, except where such other debt paid has priority over the debts due to the United States. Help with 1040x first time Income tax liabilities need not be formally assessed for the personal representative to be liable if he or she was aware or should have been aware of their existence. Help with 1040x first time Fees Received by Personal Representatives All personal representatives must include fees paid to them from an estate in their gross income. Help with 1040x first time If you are not in the trade or business of being an executor (for instance, you are the executor of a friend's or relative's estate), report these fees on your Form 1040, line 21. Help with 1040x first time If you are in the trade or business of being an executor, report fees received from the estate as self-employment income on Schedule C or Schedule C-EZ of your Form 1040. Help with 1040x first time If the estate operates a trade or business and you, as executor, actively participate in the trade or business while fulfilling your duties, any fees you receive related to the operation of the trade or business must be reported as self-employment income on Schedule C (or Schedule C-EZ) of your Form 1040. Help with 1040x first time Final Income Tax Return for Decedent—Form 1040 The personal representative (defined earlier) must file the final income tax return (Form 1040) of the decedent for the year of death and any returns not filed for preceding years. Help with 1040x first time A surviving spouse, under certain circumstances, may have to file the returns for the decedent. Help with 1040x first time See Joint Return, later. Help with 1040x first time Return for preceding year. Help with 1040x first time   If an individual died after the close of the tax year, but before the return for that year was filed, the return for the year just closed will not be the final return. Help with 1040x first time The return for that year will be a regular return and the personal representative must file it. Help with 1040x first time Example. Help with 1040x first time Samantha Smith died on March 21, 2013, before filing her 2012 tax return. Help with 1040x first time Her personal representative must file her 2012 return by April 15, 2013. Help with 1040x first time Her final tax return covering the period from January 1, 2013, to March 20, 2013, is due April 15, 2014. Help with 1040x first time Name, Address, and Signature Write the word “DECEASED,” the decedent's name, and the date of death across the top of the tax return. Help with 1040x first time If filing a joint return, write the name and address of the decedent and the surviving spouse in the name and address fields. Help with 1040x first time If a joint return is not being filed, write the decedent's name in the name field and the personal representative's name and address in the address field. Help with 1040x first time Third party designee. Help with 1040x first time   You can check the “Yes” box in the Third Party Designee area on page 2 of the return to authorize the IRS to discuss the return with a friend, family member, or any other person you choose. Help with 1040x first time This allows the IRS to call the person you identified as the designee to answer any questions that may arise during the processing of the return. Help with 1040x first time It also allows the designee to perform certain actions. Help with 1040x first time See the Instructions for Form 1040 for details. Help with 1040x first time Signature. Help with 1040x first time   If a personal representative has been appointed, that person must sign the return. Help with 1040x first time If it is a joint return, the surviving spouse must also sign it. Help with 1040x first time If no personal representative has been appointed, the surviving spouse (on a joint return) signs the return and writes in the signature area “Filing as surviving spouse. Help with 1040x first time ” If no personal representative has been appointed and if there is no surviving spouse, the person in charge of the decedent's property must file and sign the return as “personal representative. Help with 1040x first time ” Paid preparer. Help with 1040x first time   If you pay someone to prepare, assist in preparing, or review the tax return, that person must sign the return and fill in the other blanks in the Paid Preparer Use Only area of the return. Help with 1040x first time See the Form 1040 instructions for details. Help with 1040x first time When and Where To File The final income tax return is due at the same time the decedent's return would have been due had death not occurred. Help with 1040x first time A final return for a decedent who was a calendar year taxpayer is generally due on April 15 following the year of death, regardless of when during that year death occurred. Help with 1040x first time However, when the due date falls on a Saturday, Sunday, or legal holiday, the return is filed timely if filed by the next business day. Help with 1040x first time The tax return must be prepared for the year of death regardless of when during the year death occurred. Help with 1040x first time Generally, you must file the final income tax return of the decedent with the Internal Revenue Service Center for the place where you live. Help with 1040x first time A tax return for a decedent can be electronically filed. Help with 1040x first time A personal representative may also obtain an income tax filing extension on behalf of a decedent. Help with 1040x first time Filing Requirements The gross income, age, and filing status of a decedent generally determine whether a return must be filed. Help with 1040x first time Gross income is all income received by an individual from any source in the form of money, goods, property, and services that is not tax-exempt. Help with 1040x first time It includes gross receipts from self-employment, but if the business involves manufacturing, merchandising, or mining, subtract any cost of goods sold. Help with 1040x first time In general, filing status depends on whether the decedent was considered single or married at the time of death. Help with 1040x first time See the income tax return instructions or Publication 501, Exemptions, Standard Deduction, and Filing Information. Help with 1040x first time Refund A return must be filed to obtain a refund if tax was withheld from salaries, wages, pensions, or annuities, or if estimated tax was paid, even if a return is not otherwise required to be filed. Help with 1040x first time Also, the decedent may be entitled to other credits that result in a refund. Help with 1040x first time These advance payments of tax and credits are discussed later under Credits, Other Taxes, and Payments. Help with 1040x first time Form 1310, Statement of Person Claiming Refund Due a Deceased Taxpayer. Help with 1040x first time   Form 1310 does not have to be filed if you are claiming a refund and you are: A surviving spouse filing an original or amended joint return with the decedent, or A court-appointed or certified personal representative filing the decedent’s original return and a copy of the court certificate showing your appointment is attached to the return. Help with 1040x first time   If the personal representative is filing a claim for refund on Form 1040X, Amended U. Help with 1040x first time S. Help with 1040x first time Individual Income Tax Return, or Form 843, Claim for Refund and Request for Abatement, and the court certificate has already been filed with the IRS, attach Form 1310 and write “Certificate Previously Filed” at the bottom of the form. Help with 1040x first time Example. Help with 1040x first time Edward Green died before filing his tax return. Help with 1040x first time You were appointed the personal representative for Edward's estate, and you file his Form 1040 showing a refund due. Help with 1040x first time You do not need Form 1310 to claim the refund if you attach a copy of the court certificate showing you were appointed the personal representative. Help with 1040x first time    If you are a surviving spouse and you receive a tax refund check in both your name and your deceased spouse's name, you can have the check reissued in your name alone. Help with 1040x first time Return the joint-name check marked “VOID” to your local IRS office or the service center where you mailed your return, along with a written request for reissuance of the refund check. Help with 1040x first time A new check will be issued in your name and mailed to you. Help with 1040x first time Death certificate. Help with 1040x first time   When filing the decedent's final income tax return, do not attach the death certificate or other proof of death to the final return. Help with 1040x first time Instead, keep it for your records and provide it if requested. Help with 1040x first time Nonresident Alien If the decedent was a nonresident alien who would have had to file Form 1040NR, U. Help with 1040x first time S. Help with 1040x first time Nonresident Alien Income Tax Return, you must file that form for the decedent's final tax year. Help with 1040x first time See the Instructions for Form 1040NR for the filing requirements, due date, and where to file. Help with 1040x first time Joint Return Generally, the personal representative and the surviving spouse can file a joint return for the decedent and the surviving spouse. Help with 1040x first time However, the surviving spouse alone can file the joint return if no personal representative has been appointed before the due date for filing the final joint return for the year of death. Help with 1040x first time This also applies to the return for the preceding year if the decedent died after the close of the preceding tax year and before filing the return for that year. Help with 1040x first time The income of the decedent that was includible on his or her return for the year up to the date of death (see Income To Include, later) and the income of the surviving spouse for the entire year must be included in the final joint return. Help with 1040x first time A final joint return with the decedent cannot be filed if the surviving spouse remarried before the end of the year of the decedent's death. Help with 1040x first time The filing status of the decedent in this instance is married filing a separate return. Help with 1040x first time For information about tax benefits to which a surviving spouse may be entitled, see Tax Benefits for Survivors, later, under Other Tax Information. Help with 1040x first time Personal representative may revoke joint return election. Help with 1040x first time   A court-appointed personal representative may revoke an election to file a joint return previously made by the surviving spouse alone. Help with 1040x first time This is done by filing a separate return for the decedent within one year from the due date of the return (including any extensions). Help with 1040x first time The joint return made by the surviving spouse will then be regarded as the separate return of that spouse by excluding the decedent's items and refiguring the tax liability. Help with 1040x first time Relief from joint liability. Help with 1040x first time   In some cases, one spouse may be relieved of joint liability for tax, interest, and penalties on a joint return for items of the other spouse that were incorrectly reported on the joint return. Help with 1040x first time If the decedent qualified for this relief while alive, the personal representative can pursue an existing request, or file a request, for relief from joint liability. Help with 1040x first time For information on requesting this relief, see Publication 971, Innocent Spouse Relief. Help with 1040x first time Income To Include The decedent's income includible on the final return is generally determined as if the person were still alive except that the taxable period is usually shorter because it ends on the date of death. Help with 1040x first time The method of accounting regularly used by the decedent before death also determines the income includible on the final return. Help with 1040x first time This section explains how some types of income are reported on the final return. Help with 1040x first time For more information about accounting methods, see Publication 538, Accounting Periods and Methods. Help with 1040x first time Cash Method If the decedent accounted for income under the cash method, only those items actually or constructively received before death are included on the final return. Help with 1040x first time Constructive receipt of income. Help with 1040x first time   Interest from coupons on the decedent's bonds is constructively received by the decedent if the coupons matured in the decedent's final tax year, but had not been cashed. Help with 1040x first time Include the interest income on the final return. Help with 1040x first time   Generally, a dividend is considered constructively received if it was available for use by the decedent without restriction. Help with 1040x first time If the corporation customarily mailed its dividend checks, the dividend was includible when received. Help with 1040x first time If the individual died between the time the dividend was declared and the time it was received in the mail, the decedent did not constructively receive it before death. Help with 1040x first time Do not include the dividend in the final return. Help with 1040x first time Accrual Method Generally, under an accrual method of accounting, income is reported when earned. Help with 1040x first time If the decedent used an accrual method, only the income items normally accrued before death are included on the final return. Help with 1040x first time Interest and Dividend Income (Forms 1099) Form(s) 1099 reporting interest and dividends earned by the decedent before death should be received and the amounts included on the decedent's final return. Help with 1040x first time A separate Form 1099 should show the interest and dividends earned after the date of the decedent's death and paid to the estate or other recipient that must include those amounts on its return. Help with 1040x first time You can request corrected Forms 1099 if these forms do not properly reflect the right recipient or amounts. Help with 1040x first time For example, a Form 1099-INT, reporting interest payable to the decedent, may include income that should be reported on the final income tax return of the decedent, as well as income that the estate or other recipient should report, either as income earned after death or as income in respect of the decedent (discussed later). Help with 1040x first time For income earned after death, you should ask the payer for a Form 1099 that properly identifies the recipient (by name and identification number) and the proper amount. Help with 1040x first time If that is not possible, or if the form includes an amount that represents income in respect of the decedent, report the interest as shown next under How to report. Help with 1040x first time See U. Help with 1040x first time S. Help with 1040x first time savings bonds acquired from decedent under Income in Respect of a Decedent, later, for information on savings bond interest that may have to be reported on the final return. Help with 1040x first time How to report. Help with 1040x first time   If you are preparing the decedent's final return and you have received a Form 1099-INT for the decedent that includes amounts belonging to the decedent and to another recipient (the decedent's estate or another beneficiary), report the total interest shown on Form 1099-INT on Schedule B (Form 1040A or 1040), Interest and Ordinary Dividends. Help with 1040x first time Next, enter a subtotal of the interest shown on Forms 1099, and the interest reportable from other sources for which you did not receive Forms 1099. Help with 1040x first time Then, show any interest (including any interest you receive as a nominee) belonging to another recipient separately and subtract it from the subtotal. Help with 1040x first time Identify the amount of this adjustment as “Nominee Distribution” or other appropriate designation. Help with 1040x first time   Report dividend income for which you received a Form 1099-DIV, Dividends and Distributions, on the appropriate schedule using the same procedure. Help with 1040x first time    Note. Help with 1040x first time If the decedent received amounts as a nominee, you must give the actual owner a Form 1099, unless the owner is the decedent's spouse. Help with 1040x first time See General Instructions for Certain Information Returns (Forms 1097, 1098, 1099, 3921, 3922, 5498, and W-2G) for more information on filing Forms 1099. Help with 1040x first time Partnership Income The death of a partner closes the partnership's tax year for that partner. Help with 1040x first time Generally, it does not close the partnership's tax year for the remaining partners. Help with 1040x first time The decedent's distributive share of partnership items must be figured as if the partnership's tax year ended on the date the partner died. Help with 1040x first time To avoid an interim closing of the partnership books, the partners can agree to estimate the decedent's distributive share by prorating the amounts the partner would have included for the entire partnership tax year. Help with 1040x first time On the decedent's final return, include the decedent's distributive share of partnership items for the following periods. Help with 1040x first time The partnership's tax year that ended within or with the decedent's final tax year (the year ending on the date of death). Help with 1040x first time The period, if any, from the end of the partnership's tax year in (1) to the decedent's date of death. Help with 1040x first time Example. Help with 1040x first time Mary Smith was a partner in XYZ partnership and reported her income on a tax year ending December 31. Help with 1040x first time The partnership uses a tax year ending June 30. Help with 1040x first time Mary died August 31, 2013, and her estate established its tax year through August 31. Help with 1040x first time The distributive share of partnership items based on the decedent's partnership interest is reported as follows. Help with 1040x first time Final Return for the Decedent—January 1 through August 31, 2013, includes XYZ partnership items from (a) the partnership tax year ending June 30, 2013, and (b) the partnership tax year beginning July 1, 2013, and ending August 31, 2013 (the date of death). Help with 1040x first time Income Tax Return of the Estate—September 1, 2013, through August 31, 2014, includes XYZ partnership items for the period September 1, 2013, through June 30, 2014. Help with 1040x first time S Corporation Income If the decedent was a shareholder in an S corporation, include on the final return the decedent's share of the S corporation's items of income, loss, deduction, and credit for the following periods. Help with 1040x first time The corporation's tax year that ended within or with the decedent's final tax year (the year ending on the date of death). Help with 1040x first time The period, if any, from the end of the corporation's tax year in (1) to the decedent's date of death. Help with 1040x first time Self-Employment Income Include self-employment income actually or constructively received or accrued, depending on the decedent's accounting method. Help with 1040x first time For self-employment tax purposes only, the decedent's self-employment income will include the decedent's distributive share of a partnership's income or loss through the end of the month in which death occurred. Help with 1040x first time For this purpose, the partnership's income or loss is considered to be earned ratably over the partnership's tax year. Help with 1040x first time Community Income If the decedent was married and domiciled in a community property state, half of the income received and half of the expenses paid during the decedent's tax year by either the decedent or spouse may be considered to be the income and expenses of the other. Help with 1040x first time For more information, see Publication 555, Community Property. Help with 1040x first time HSA, Archer MSA, or Medicare Advantage MSA The treatment of an HSA (health savings account), an Archer MSA (medical savings account), or a Medicare Advantage MSA at the death of the account holder, depends on who acquires the interest in the account. Help with 1040x first time If the decedent's estate acquires the interest, the fair market value (FMV) of the assets in the account on the date of death is included in income on the decedent's final return. Help with 1040x first time The estate tax deduction, discussed later, does not apply to this amount. Help with 1040x first time If a beneficiary acquires the interest, see the discussion under Income in Respect of a Decedent, later. Help with 1040x first time For other information on HSAs, Archer MSAs, or Medicare Advantage MSAs, see Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans. Help with 1040x first time Coverdell Education Savings Account (ESA) Generally, the balance in a Coverdell ESA must be distributed within 30 days after the individual for whom the account was established reaches age 30, or dies, whichever is earlier. Help with 1040x first time The treatment of the Coverdell ESA at the death of an individual under age 30 depends on who acquires the interest in the account. Help with 1040x first time If the decedent's estate acquires the interest, the earnings on the account must be included on the final income tax return of the decedent. Help with 1040x first time The estate tax deduction, discussed later, does not apply to this amount. Help with 1040x first time If a beneficiary acquires the interest, see the discussion under Income in Respect of a Decedent, later. Help with 1040x first time The age 30 limitation does not apply if the individual for whom the account was established or the beneficiary that acquires the account is an individual with special needs. Help with 1040x first time This includes an individual who, because of a physical, mental, or emotional condition (including a learning disability), requires additional time to complete his or her education. Help with 1040x first time For more information on Coverdell ESAs, see Publication 970, Tax Benefits for Education. Help with 1040x first time Accelerated Death Benefits Accelerated death benefits are amounts received under a life insurance contract before the death of the insured individual. Help with 1040x first time These benefits also include amounts received on the sale or assignment of the contract to a viatical settlement provider. Help with 1040x first time Generally, if the decedent received accelerated death benefits on the life of a terminally or chronically ill individual, whether on his or her own life or on the life of another person, those benefits are not included in the decedent's income. Help with 1040x first time For more information, see the discussion under Gifts, Insurance, and Inheritances under Other Tax Information, later. Help with 1040x first time Exemptions and Deductions Generally, the rules for exemptions and deductions allowed to an individual also apply to the decedent's final income tax return. Help with 1040x first time Show on the final return deductible items the decedent paid (or accrued, if the decedent reported deductions on an accrual method) before death. Help with 1040x first time This section contains a detailed discussion of medical expenses because the tax treatment of the decedent's medical expenses can be different. Help with 1040x first time See Medical Expenses, later. Help with 1040x first time Exemptions You can claim the decedent's personal exemption on the final income tax return. Help with 1040x first time If the decedent was another person's dependent (for example, a parent's), you cannot claim the personal exemption on the decedent's final return. Help with 1040x first time Standard Deduction If you do not itemize deductions on the final return, the full amount of the appropriate standard deduction is allowed regardless of the date of death. Help with 1040x first time For information on the appropriate standard deduction, see the Form 1040 income tax return instructions or Publication 501. Help with 1040x first time Medical Expenses Medical expenses paid before death by the decedent are deductible, subject to limits, on the final income tax return if deductions are itemized. Help with 1040x first time This includes expenses for the decedent, as well as for the decedent's spouse and dependents. Help with 1040x first time Beginning in 2013, medical expenses exceeding 10% of adjusted gross income (AGI) may be deducted, unless the decedent or their spouse is age 65 or older. Help with 1040x first time In that case medical expenses exceeding 7. Help with 1040x first time 5% of AGI may be deducted. Help with 1040x first time Qualified medical expenses are not deductible if paid with a tax-free distribution from an HSA or an Archer MSA. Help with 1040x first time Election for decedent's expenses. Help with 1040x first time   Medical expenses not paid before death are liabilities of the estate and are shown on the federal estate tax return (Form 706). Help with 1040x first time However, if medical expenses for the decedent are paid out of the estate during the 1-year period beginning with the day after death, you can elect to treat all or part of the expenses as paid by the decedent at the time they were incurred. Help with 1040x first time   If you make the election, you can claim all or part of the expenses on the decedent's income tax return (if deductions are itemized) rather than on the federal estate tax return (Form 706). Help with 1040x first time You can deduct expenses incurred in the year of death on the final income tax return. Help with 1040x first time You should file an amended return (Form 1040X) for medical expenses incurred in an earlier year, unless the statutory period for filing a claim for that year has expired. Help with 1040x first time   The amount you can deduct on the income tax return is the amount above 10% of adjusted gross income (or 7. Help with 1040x first time 5% of adjusted gross income if the decedent or the decedent's spouse was born before January 2, 1949). Help with 1040x first time Amounts not deductible because of this percentage cannot be claimed on the federal estate tax return. Help with 1040x first time Making the election. Help with 1040x first time   You make the election by attaching a statement, in duplicate, to the decedent's income tax return or amended return. Help with 1040x first time The statement must state that you have not claimed the amount as an estate tax deduction, and that the estate waives the right to claim the amount as a deduction. Help with 1040x first time This election applies only to expenses incurred for the decedent, not to expenses incurred to provide medical care for dependents. Help with 1040x first time Example. Help with 1040x first time Richard Brown used the cash method of accounting and filed his income tax return on a calendar year basis. Help with 1040x first time Richard died on June 1, 2013, at the age of 78, after incurring $800 in medical expenses. Help with 1040x first time Of that amount, $500 was incurred in 2012 and $300 was incurred in 2013. Help with 1040x first time Richard itemized his deductions when he filed his 2012 income tax return. Help with 1040x first time The personal representative of the estate paid the entire $800 liability in August 2013. Help with 1040x first time The personal representative may file an amended return (Form 1040X) for 2012 claiming the $500 medical expense as a deduction, subject to the 7. Help with 1040x first time 5% limit. Help with 1040x first time The $300 of expenses incurred in 2013 can be deducted on the final income tax return if deductions are itemized, subject to the 7. Help with 1040x first time 5% limit. Help with 1040x first time The personal representative must file a statement in duplicate with each return stating that these amounts have not been claimed on the federal estate tax return (Form 706), and waiving the right to claim such a deduction on Form 706 in the future. Help with 1040x first time Medical expenses not paid by estate. Help with 1040x first time   If you paid medical expenses for your deceased spouse or dependent, claim the expenses on your tax return for the year in which you paid them, whether they are paid before or after the decedent's death. Help with 1040x first time If the decedent was a child of divorced or separated parents, the medical expenses can usually be claimed by both the custodial and noncustodial parent to the extent paid by that parent during the year. Help with 1040x first time Insurance reimbursements. Help with 1040x first time   Insurance reimbursements of previously deducted medical expenses due a decedent at the time of death and later received by the decedent's estate are includible in the income tax return of the estate (Form 1041) for the year the reimbursements are received. Help with 1040x first time The reimbursements are also includible in the decedent's gross estate. Help with 1040x first time No deduction for funeral expenses can be taken on the final Form 1040 of a decedent. Help with 1040x first time These expenses may be deductible for estate tax purposes on Form 706. Help with 1040x first time Deduction for Losses A decedent's net operating loss deduction from a prior year and any capital losses (including capital loss carryovers) can be deducted only on the decedent's final income tax return. Help with 1040x first time A net operating loss on the decedent's final income tax return can be carried back to prior years. Help with 1040x first time (See Publication 536, Net Operating Losses (NOLs) for Individuals, Estates, and Trusts. Help with 1040x first time ) You cannot deduct any unused net operating loss or capital loss on the estate's income tax return. Help with 1040x first time At-risk loss limits. Help with 1040x first time   Special at-risk rules apply to most activities that are engaged in as a trade or business or for the production of income. Help with 1040x first time   These rules limit the deductible loss to the amount which the individual was considered at-risk in the activity. Help with 1040x first time An individual generally will be considered at-risk to the extent of the money and the adjusted basis of property that he or she contributed to the activity and certain amounts the individual borrowed for use in the activity. Help with 1040x first time An individual will be considered at-risk for amounts borrowed only if he or she was personally liable for the repayment or if the amounts borrowed were secured by property other than that used in the activity. Help with 1040x first time The individual is not considered at-risk for borrowed amounts if the lender has an interest in the activity or if the lender is related to a person who has an interest in the activity. Help with 1040x first time For more information, see Publication 925, Passive Activity and At-Risk Rules. Help with 1040x first time Passive activity rules. Help with 1040x first time   A passive activity is any trade or business activity in which the taxpayer does not materially participate. Help with 1040x first time To determine material participation, see Publication 925. Help with 1040x first time Rental activities are passive activities regardless of the taxpayer's participation, unless the taxpayer meets certain eligibility requirements. Help with 1040x first time   Individuals, estates, and trusts can offset passive activity losses only against passive activity income. Help with 1040x first time Passive activity losses or credits not allowed in one tax year can be carried forward to the next year. Help with 1040x first time   If a passive activity interest is transferred because a taxpayer dies, the accumulated unused passive activity losses are allowed as a deduction against the decedent's income in the year of death. Help with 1040x first time Losses are allowed only to the extent they are greater than the excess of the transferee's (recipient of the interest transferred) basis in the property over the decedent's adjusted basis in the property immediately before death. Help with 1040x first time The part of the accumulated losses equal to the excess is not allowed as a deduction for any tax year. Help with 1040x first time   Use Form 8582, Passive Activity Loss Limitations, to summarize losses and income from passive activities and to figure the amounts allowed. Help with 1040x first time For more information, see Publication 925. Help with 1040x first time Credits, Other Taxes, and Payments Discussed below are some of the tax credits, types of taxes that may be owed, income tax withheld, and estimated tax payments reported on the final return of a decedent. Help with 1040x first time Credits On the final income tax return, you can claim any tax credits that applied to the decedent before death. Help with 1040x first time Some of these credits are discussed next. Help with 1040x first time Earned income credit. Help with 1040x first time   If the decedent was an eligible individual, you can claim the earned income credit on the decedent's final return even though the return covers less than 12 months. Help with 1040x first time If the allowable credit is more than the tax liability for the year, the excess is refunded. Help with 1040x first time   For more information, see Publication 596, Earned Income Credit (EIC). Help with 1040x first time Credit for the elderly or the disabled. Help with 1040x first time   This credit is allowable on a decedent's final income tax return if the decedent met both of the following requirements in the year of death. Help with 1040x first time The decedent: Was a “qualified individual,” and Had income (adjusted gross income (AGI) and nontaxable social security and pensions) less than certain limits. Help with 1040x first time   For details on qualifying for or figuring the credit, see Publication 524, Credit for the Elderly or the Disabled. Help with 1040x first time Child tax credit. Help with 1040x first time   If the decedent had a qualifying child, you may be able to claim the child tax credit on the decedent's final return even though the return covers less than 12 months. Help with 1040x first time You may be able to claim the additional child tax credit and get a refund if the credit is more than the decedent's liability. Help with 1040x first time For more information, see the Instructions for Form 1040. Help with 1040x first time Adoption credit. Help with 1040x first time   Depending upon when the adoption was finalized, this credit may be taken on a decedent's final income tax return if the decedent: Adopted an eligible child and paid qualified adoption expenses, or Has a carryforward of an adoption credit from a prior year. Help with 1040x first time   Also, if the decedent is survived by a spouse who meets the filing status of qualifying widow(er), unused adoption credit may be carried forward and used following the death of the decedent. Help with 1040x first time See Form 8839, Qualified Adoption Expenses, and its instructions for more details. Help with 1040x first time General business tax credit. Help with 1040x first time   The general business credit available to a taxpayer is limited. Help with 1040x first time Any credit arising in a tax year beginning before 1998 that has not been used up can be carried forward for up to 15 years. Help with 1040x first time Any unused credit arising in a tax year beginning after 1997 has a 1-year carryback and a 20-year carryforward period. Help with 1040x first time   After the carryforward period, a deduction may be allowed for any unused business credit. Help with 1040x first time If the taxpayer dies before the end of the carryforward period, the deduction generally is allowed in the year of death. Help with 1040x first time   For more information on the general business credit, see Publication 334, Tax Guide for Small Business. Help with 1040x first time Other Taxes Taxes other than income tax that may be owed on the final return of a decedent include self-employment tax and alternative minimum tax, which are reported on Form 1040. Help with 1040x first time Self-employment tax. Help with 1040x first time   Self-employment tax may be owed on the final return if either of the following applied to the decedent in the year of death: Net earnings from self-employment (excluding income described in (2)) were $400 or more; or Wages from services performed as a church employee were $108. Help with 1040x first time 28 or more. Help with 1040x first time Alternative minimum tax (AMT). Help with 1040x first time   The tax laws give special treatment to certain types of income and allow special deductions and credits for certain types of expenses. Help with 1040x first time The alternative minimum tax (AMT) was enacted so taxpayers who benefit from these laws still pay at least a minimum amount of tax. Help with 1040x first time In general, the AMT is the excess of the tentative minimum tax over the regular tax shown on the return. Help with 1040x first time Form 6251. Help with 1040x first time    Use Form 6251, Alternative Minimum Tax—Individuals, to determine if this tax applies to the decedent. Help with 1040x first time See the form instructions for information on when you must attach Form 6251 to Form 1040. Help with 1040x first time Form 8801. Help with 1040x first time   If the decedent paid AMT in a previous year or had a credit carryforward, the decedent may be eligible for a minimum tax credit. Help with 1040x first time See Form 8801, Credit for Prior Year Minimum Tax—Individuals, Estates, and Trusts. Help with 1040x first time Payments of Tax The income tax withheld from the decedent's salary, wages, pensions, or annuities, and the amount paid as estimated tax are credits (advance payments of tax) that must be claimed on the final return. Help with 1040x first time Tax Forgiveness for Armed Forces Members, Victims of Terrorism, and Astronauts Income tax liability may be forgiven for a decedent who dies due to service in a combat zone, due to military or terrorist actions, as a result of a terrorist attack, or while serving in the line of duty as an astronaut. Help with 1040x first time Combat Zone If a member of the Armed Forces of the United States dies while in active service in a combat zone or from wounds, disease, or injury incurred in a combat zone, the decedent's income tax liability is abated (forgiven) for the entire year in which death occurred and for any prior tax year ending on or after the first day the person served in a combat zone in active service. Help with 1040x first time For this purpose, a qualified hazardous duty area is treated as a combat zone. Help with 1040x first time If the tax (including interest, additions to the tax, and additional amounts) for these years has been assessed, the assessment will be forgiven. Help with 1040x first time If the tax has been collected (regardless of the date of collection), that tax will be credited or refunded. Help with 1040x first time Any of the decedent's income tax for tax years before those mentioned above that remains unpaid as of the actual (or presumptive) date of death will not be assessed. Help with 1040x first time If any unpaid tax (including interest, additions to the tax, and additional amounts) has been assessed, this assessment will be forgiven. Help with 1040x first time Also, if any tax was collected after the date of death, that amount will be credited or refunded. Help with 1040x first time The date of death of a member of the Armed Forces reported as missing in action or as a prisoner of war is the date his or her name is removed from missing status for military pay purposes. Help with 1040x first time This is true even if death actually occurred earlier. Help with 1040x first time For other tax information for members of the Armed Forces, see Publication 3, Armed Forces' Tax Guide. Help with 1040x first time Military or Terrorist Actions The decedent's income tax liability is forgiven if, at death, he or she was a military or civilian employee of the United States who died because of wounds or injury incurred: While a U. Help with 1040x first time S. Help with 1040x first time employee, and In a military or terrorist action. Help with 1040x first time The forgiveness applies to the tax year in which death occurred and for any earlier tax year, beginning with the year before the year in which the wounds or injury occurred. Help with 1040x first time Example. Help with 1040x first time The income tax liability of a civilian employee of the United States who died in 2013 because of wounds incurred while a U. Help with 1040x first time S. Help with 1040x first time employee in a terrorist attack that occurred in 2008 will be forgiven for 2013 and for all prior tax years in the period 2007 through 2012. Help with 1040x first time Refunds are allowed for the tax years for which the period for filing a claim for refund has not ended, as discussed later. Help with 1040x first time Military or terrorist action defined. Help with 1040x first time   A military or terrorist action means the following. Help with 1040x first time Any terrorist activity that most of the evidence indicates was directed against the United States or any of its allies. Help with 1040x first time Any military action involving the U. Help with 1040x first time S. Help with 1040x first time Armed Forces and resulting from violence or aggression against the United States or any of its allies, or the threat of such violence or aggression. Help with 1040x first time   Terrorist activity includes criminal offenses intended to coerce, intimidate, or retaliate against the government or civilian population. Help with 1040x first time Military action does not include training exercises. Help with 1040x first time Any multinational force in which the United States is participating is treated as an ally of the United States. Help with 1040x first time Determining if a terrorist activity or military action has occurred. Help with 1040x first time   You may rely on published guidance from the IRS to determine if a particular event is considered a terrorist activity or military action. Help with 1040x first time Specified Terrorist Victim The Victims of Terrorism Tax Relief Act of 2001 (the Act) provides tax relief for those injured or killed as a result of terrorist attacks, certain survivors of those killed as a result of terrorist attacks, and others who were affected by terrorist attacks. Help with 1040x first time Under the Act, the federal income tax liability of those killed in the following attacks (specified terrorist victim) is forgiven for certain tax years. Help with 1040x first time The April 19, 1995, terrorist attack on the Alfred P. Help with 1040x first time Murrah Federal Building (Oklahoma City). Help with 1040x first time The September 11, 2001, terrorist attacks. Help with 1040x first time The terrorist attacks involving anthrax occurring after September 10, 2001, and before January 1, 2002. Help with 1040x first time The Act also exempts from federal income tax the following types of income. Help with 1040x first time Qualified disaster relief payments made after September 10, 2001, to cover personal, family, living, or funeral expenses incurred because of a terrorist attack. Help with 1040x first time Certain disability payments received in tax years ending after September 10, 2001, for injuries sustained in a terrorist attack. Help with 1040x first time Certain death benefits paid by an employer to the survivor of an employee because the employee died as a result of a terrorist attack. Help with 1040x first time Payments from the September 11th Victim Compensation Fund 2001. Help with 1040x first time The Act also reduces the estate tax of individuals who die as a result of a terrorist attack. Help with 1040x first time See Publication 3920, Tax Relief for Victims of Terrorist Attacks, for more information. Help with 1040x first time Astronauts Legislation extended the tax relief available under the Victims of Terrorism Tax Relief Act of 2001 (the Act) to astronauts who died in the line of duty after December 31, 2002. Help with 1040x first time The decedent's income tax liability is forgiven for the tax year in which death occurs, and for the tax year prior to death. Help with 1040x first time For information on death benefit payments and the reduction of federal estate taxes, see Publication 3920. Help with 1040x first time However, the discussions in that publication under Death Benefits and Estate Tax Reduction should be modified for astronauts (for example, by using the date of death of the astronaut instead of September 11, 2001). Help with 1040x first time For more information on the Act, see Publication 3920. Help with 1040x first time Claim for Credit or Refund If any of these tax-forgiveness situations applies to a prior year tax, any tax paid for which the period for filing a claim has not ended will be credited or refunded. Help with 1040x first time If any tax is still due, it will be canceled. Help with 1040x first time The normal period for filing a claim for credit or refund is 3 years after the return was filed or 2 years after the tax was paid, whichever is later. Help with 1040x first time If death occurred in a combat zone or from wounds, disease, or injury incurred in a combat zone, the period for filing the claim is extended by: The amount of time served in the combat zone (including any period in which the individual was in missing status), plus The period of continuous qualified hospitalization for injury from service in the combat zone, if any, plus The next 180 days. Help with 1040x first time Qualified hospitalization means any hospitalization outside the United States and any hospitalization in the United States of not more than 5 years. Help with 1040x first time This extended period for filing the claim also applies to a member of the Armed Forces who was deployed outside the United States in a designated contingency operation. Help with 1040x first time Filing a claim. Help with 1040x first time   Use the following procedures to file a claim. Help with 1040x first time If a U. Help with 1040x first time S. Help with 1040x first time individual income tax return (Form 1040, 1040A, or 1040EZ) has not been filed, you should make a claim for refund of any withheld income tax or estimated tax payments by filing Form 1040. Help with 1040x first time Form W-2, Wage and Tax Statement, must accompany all returns. Help with 1040x first time If a U. Help with 1040x first time S. Help with 1040x first time individual income tax return has been filed, you should make a claim for refund by filing Form 1040X. Help with 1040x first time You must file a separate Form 1040X for each year in question. Help with 1040x first time   You must file these returns and claims at the following address for regular mail (U. Help with 1040x first time S. Help with 1040x first time Postal Service). Help with 1040x first time    Internal Revenue Service 333 W. Help with 1040x first time Pershing, P5–6503 Kansas City, MO 64108   Identify all returns and claims for refund by writing “Iraq—KIA,” “Enduring Freedom—KIA,” “Kosovo Operation—KIA,” “Desert Storm—KIA,” or “Former Yugoslavia—KIA” in bold letters on the top of page 1 of the return or claim. Help with 1040x first time On the applicable return, write the same phrase on the line for total tax. Help with 1040x first time If the individual was killed in a terrorist or military action, put “KITA” on the front of the return and on the line for total tax. Help with 1040x first time   Include an attachment showing the computation of the decedent's tax liability and a computation of the amount to be forgiven. Help with 1040x first time On joint returns, make an allocation of the tax as described below under Joint returns. Help with 1040x first time If you cannot make a proper allocation, attach a statement of all income and deductions allocable to each spouse and the IRS will make the proper allocation. Help with 1040x first time   You must attach Form 1310 to all returns and claims for refund. Help with 1040x first time However, for exceptions to filing Form 1310, see Form 1310. Help with 1040x first time Statement of Person Claiming Refund Due a Deceased Taxpayer, under Refund, earlier. Help with 1040x first time   You must also attach proof of death that includes a statement that the individual was a U. Help with 1040x first time S. Help with 1040x first time employee on the date of injury and on the date of death and died as the result of a military or terrorist action. Help with 1040x first time For military and civilian employees of the Department of Defense, attach DD Form 1300, Report of Casualty. Help with 1040x first time For other U. Help with 1040x first time S. Help with 1040x first time civilian employees killed in the United States, attach a death certificate and a certification (letter) from the federal employer. Help with 1040x first time For other U. Help with 1040x first time S. Help with 1040x first time civilian employees killed overseas, attach a certification from the Department of State. Help with 1040x first time   If you do not have enough tax information to file a timely claim for refund, you can suspend the period for filing a claim by filing Form 1040X. Help with 1040x first time Attach Form 1310, any required documentation currently available, and a statement that you will file an amended claim as soon as you have the required tax information. Help with 1040x first time Joint returns. Help with 1040x first time   If a joint return was filed, only the decedent's part of the income tax liability is eligible for forgiveness. Help with 1040x first time Determine the decedent's tax liability as follows. Help with 1040x first time Figure the income tax for which the decedent would have been liable if a separate return had been filed. Help with 1040x first time Figure the income tax for which the spouse would have been liable if a separate return had been filed. Help with 1040x first time Multiply the joint tax liability by a fraction. Help with 1040x first time The numerator of the fraction is the amount in (1), above. Help with 1040x first time The denominator of the fraction is the total of (1) and (2). Help with 1040x first time   The resulting amount from (3) above is the decedent's tax liability eligible for forgiveness. Help with 1040x first time Filing Reminders To minimize the time needed to process the decedent's final return and issue any refund, be sure to follow these procedures. Help with 1040x first time Write “DECEASED,” the decedent's name, and the date of death across the top of the tax return. Help with 1040x first time If a personal representative has been appointed, the personal representative must sign the return. Help with 1040x first time If it is a joint return, the surviving spouse must also sign it. Help with 1040x first time If you are the decedent's spouse filing a joint return with the decedent and no personal representative has been appointed, write “Filing as surviving spouse” in the area where you sign the return. Help with 1040x first time If no personal representative has been appointed and if there is no surviving spouse, the person in charge of the decedent's property must file and sign the return as “personal representative. Help with 1040x first time ” To claim a refund for the decedent, do the following. Help with 1040x first time If you are the decedent's spouse filing a joint return with the decedent, file only the tax return to claim the refund. Help with 1040x first time If you are the personal representative and the return is not a joint return filed with the decedent's surviving spouse, file the return and attach a copy of the certificate that shows your appointment by the court. Help with 1040x first time (A power of attorney or a copy of the decedent's will is not acceptable evidence of your appointment as the personal representative. Help with 1040x first time ) If you are filing an amended return, attach Form 1310 and a copy of the certificate of appointment (or, if you have already sent the certificate of appointment to IRS, write “Certificate Previously Filed” at the bottom of Form 1310). Help with 1040x first time If you are not filing a joint return as the surviving spouse and a personal representative has not been appointed, file the return and attach Form 1310. Help with 1040x first time Other Tax Information Discussed below is information about the effect of an individual's death on the income tax liability of the survivors (including widows and widowers), the beneficiaries, and the estate. Help with 1040x first time Tax Benefits for Survivors Survivors can qualify for certain benefits when filing their own income tax returns. Help with 1040x first time Joint return by surviving spouse. Help with 1040x first time   A surviving spouse can file a joint return for the year of death and may qualify for special tax rates for the following 2 years, as explained under Qualifying widows and widowers, later. Help with 1040x first time Decedent as your dependent. Help with 1040x first time   If the decedent qualified as your dependent for a part of the year before death, you can claim the exemption for the dependent on your tax return, regardless of when death occurred during the year. Help with 1040x first time   If the decedent was your qualifying child, you may be able to claim the child tax credit or the earned income credit. Help with 1040x first time To determine if you qualify for the child tax credit, see the instructions for Form 1040, line 51; Form 1040A, line 33; or Form 1040NR, line 48. Help with 1040x first time To determine if you qualify for the earned income credit, see the instructions for Form 1040, lines 64a and 64b or Form 1040A, lines 38a and 38b. Help with 1040x first time Qualifying widows and widowers. Help with 1040x first time   If your spouse died within the 2 tax years preceding the year for which your return is being filed, you may be eligible to claim the filing status of qualifying widow(er) with dependent child and qualify to use the married-filing-jointly tax rates. Help with 1040x first time Requirements. Help with 1040x first time   Generally, you qualify for this special benefit if you meet all of the following requirements. Help with 1040x first time You were entitled to file a joint return with your spouse for the year of death—whether or not you actually filed jointly. Help with 1040x first time You did not remarry before the end of the current tax year. Help with 1040x first time You have a child, stepchild, or foster child who qualifies as your dependent for the tax year. Help with 1040x first time You provide more than half the cost of maintaining your home, which is the principal residence of that child for the entire year except for temporary absences. Help with 1040x first time Example. Help with 1040x first time William Burns' wife died in 2010. Help with 1040x first time William has not remarried and continued throughout 2011 and 2012 to maintain a home for himself and his dependent child. Help with 1040x first time For 2010, he was entitled to file a joint return for himself and his deceased wife. Help with 1040x first time For 2011 and 2012, he qualifies to file as a qualifying widower with dependent child. Help with 1040x first time For later years, he may qualify to file as a head of household. Help with 1040x first time Figuring your tax. Help with 1040x first time   Check the box on line 5 (Form 1040 or 1040A) under Filing Status on your tax return. Help with 1040x first time Use the Tax Rate Schedule or the column in the Tax Table for Married filing jointly, which gives you the split-income benefits. Help with 1040x first time   The last year you can file jointly with, or claim an exemption for, your deceased spouse is the year of death. Help with 1040x first time Joint return filing rules. Help with 1040x first time   If you are the surviving spouse and a personal representative is handling the estate for the decedent, you should coordinate filing your return for the year of death with this personal representative. Help with 1040x first time See Joint Return under Final Income Tax Return for Decedent—Form 1040, earlier. Help with 1040x first time Income in Respect of a Decedent All income the decedent would have received had death not occurred that was not properly includible on the final return, discussed earlier, is income in respect of a decedent. Help with 1040x first time If the decedent is a specified terrorist victim (see Specified Terrorist Victim, earlier), income received after the date of death and before the end of the decedent's tax year (determined without regard to death) is excluded from the recipient's gross income. Help with 1040x first time This exclusion does not apply to certain income. Help with 1040x first time For more information, see Publication 3920. Help with 1040x first time How To Report Income in respect of a decedent must be included in the income of one of the following. Help with 1040x first time The decedent's estate, if the estate receives it. Help with 1040x first time The beneficiary, if the right to income is passed directly to the beneficiary and the beneficiary receives it. Help with 1040x first time Any person to whom the estate properly distributes the right to receive it. Help with 1040x first time If you have to include income in respect of a decedent in your gross income and an estate tax return (Form 706) was filed for the decedent, you may be able to claim a deduction for the estate tax paid on that income. Help with 1040x first time See Estate Tax Deduction, later. Help with 1040x first time Example 1. Help with 1040x first time Frank Johnson owned and operated an apple orchard. Help with 1040x first time He used the cash method of accounting. Help with 1040x first time He sold and delivered 1,000 bushels of apples to a canning factory for $2,000, but did not receive payment before his death. Help with 1040x first time The proceeds from the sale are income in respect of a decedent. Help with 1040x first time When the estate was settled, payment had not been made and the estate transferred the right to the payment to his widow. Help with 1040x first time When Frank's widow collects the $2,000, she must include that amount in her return. Help with 1040x first time It is not reported on the final return of the decedent or on the return of the estate. Help with 1040x first time Example 2. Help with 1040x first time Assume the same facts as in Example 1, except that Frank used the accrual method of accounting. Help with 1040x first time The amount accrued from the sale of the apples would be included on his final return. Help with 1040x first time Neither the estate nor the widow would realize income in respect of a decedent when the money is later paid. Help with 1040x first time Example 3. Help with 1040x first time On February 1, George High, a cash method taxpayer, sold his tractor for $3,000, payable March 1 of the same year. Help with 1040x first time His adjusted basis in the tractor was $2,000. Help with 1040x first time George died on February 15, before receiving payment. Help with 1040x first time The gain to be reported as income in respect of a decedent is the $1,000 difference between the decedent's basis in the property and the sale proceeds. Help with 1040x first time In other words, the income in respect of a decedent is the gain the decedent would have realized had he lived. Help with 1040x first time Example 4. Help with 1040x first time Cathy O'Neil was entitled to a large salary payment at the date of her death. Help with 1040x first time The amount was to be paid in five annual installments. Help with 1040x first time The estate, after collecting two installments, distributed the right to the remaining installments to you, the beneficiary. Help with 1040x first time The payments are income in respect of a decedent. Help with 1040x first time None of the payments were includible on Cathy's final return. Help with 1040x first time The estate must include in its income the two installments it received, and you must include in your income each of the three installments as you receive them. Help with 1040x first time Example 5. Help with 1040x first time You inherited the right to receive renewal commissions on life insurance sold by your father before his death. Help with 1040x first time You inherited the right from your mother, who acquired it by bequest from your father. Help with 1040x first time Your mother died before she received all the commissions she had the right to receive, so you received the rest. Help with 1040x first time The commissions are income in respect of a decedent. Help with 1040x first time None of these commissions were includible in your father's final return. Help with 1040x first time The commissions received by your mother were included in her income. Help with 1040x first time The commissions you received are not includible in your mother's income, even on her final return. Help with 1040x first time You must include them in your income. Help with 1040x first time Character of income. Help with 1040x first time   The character of the income you receive in respect of a decedent remains the same as it would have been to the decedent if he or she were alive. Help with 1040x first time If the income would have been a capital gain to the decedent, it will be a capital gain to you. Help with 1040x first time Transfer of right to income. Help with 1040x first time   If you transfer your right to income in respect of a decedent, you must include in your income the greater of: The amount you receive for the right, or The fair market value of the right you transfer. Help with 1040x first time   If you make a gift of such a right, you must include in your income the fair market value of the right at the time of the gift. Help with 1040x first time   If the right to income from an installment obligation is transferred, the amount you must include in income is reduced by the basis of the obligation. Help with 1040x first time See Installment obligations, later. Help with 1040x first time Transfer defined. Help with 1040x first time   A transfer for this purpose includes a sale, exchange, or other disposition, the satisfaction of an installment obligation at other than face value, or the cancellation of an installment obligation. Help with 1040x first time Installment obligations. Help with 1040x first time   If the decedent sold property using the installment method and you are collecting payments on an installment obligation acquired from the decedent, use the same gross profit percentage the decedent used to figure the part of each payment that represents profit. Help with 1040x first time Include in your income the same profit the decedent would have included had death not occurred. Help with 1040x first time For more information, see Publication 537, Installment Sales. Help with 1040x first time   If you dispose of an installment obligation acquired from a decedent (other than by transfer to the obligor), the rules explained in Publication 537 for figuring gain or loss on the disposition apply to you. Help with 1040x first time Transfer to obligor. Help with 1040x first time   A transfer of a right to income, discussed earlier, has occurred if the decedent (seller) sold property using the installment method and the installment obligation was transferred to the obligor (buyer or person legally obligated to pay the installments). Help with 1040x first time A transfer also occurs if the obligation was canceled either at death or by the estate or person receiving the obligation from the decedent. Help with 1040x first time An obligation that becomes unenforceable is treated as having been canceled. Help with 1040x first time   If such a transfer occurs, the amount included in the income of the transferor (the estate or beneficiary) is the greater of the amount received or the fair market value of the installment obligation at the time of transfer, reduced by the basis of the obligation. Help with 1040x first time The basis of the obligation is the decedent's basis, adjusted for all installment payments received after the decedent's death and before the transfer. Help with 1040x first time   If the decedent and obligor were related persons, the fair market value of the obligation cannot be less than its face value. Help with 1040x first time Specific Types of Income in Respect of a Decedent This section explains and provides examples of some specific types of income in respect of a decedent. Help with 1040x first time Wages. Help with 1040x first time   The entire amount of wages or other employee compensation earned by the decedent but unpaid at the time of death is income in respect of a decedent. Help with 1040x first time The income is not reduced by any amounts withheld by the employer. Help with 1040x first time If the income is $600 or more, the employer should report it in box 3 of Form 1099-MISC, Miscellaneous Income, and give the recipient a copy of the form or a similar statement. Help with 1040x first time   Wages paid as income in respect of a decedent are not subject to federal income tax withholding. Help with 1040x first time However, if paid during the calendar year of death, they are subject to withholding for social security and Medicare taxes. Help with 1040x first time These taxes should be included on the decedent's Form W-2 along with the taxes withheld before death. Help with 1040x first time These wages are not included in box 1 of Form W-2. Help with 1040x first time   Wages paid as income in respect of a decedent after the year of death generally are not subject to withholding for any federal taxe
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Understanding your CP71C Notice

You received this notice to remind you of the amount you owe in tax, penalty and interest.

Printable samples of this notice (PDF)

Tax publications you may find useful

How to get help

Calling the 1-800 number listed on the top right corner of your notice is the fastest way to get your questions answered.

You can also authorize someone (such as an accountant) to contact the IRS on your behalf using this Power of Attorney and Declaration of Representative (Form 2848).

Or you may qualify for help from a Low Income Taxpayer Clinic.
 


What you need to do

  • Read your notice carefully — it will explain how much money you owe on your taxes.

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Answers to Common Questions

Am I charged interest on the money I owe?
Yes, interest accrues on your unpaid balance until you pay it in full.

Do I receive a penalty if I cannot pay the full amount?
Yes, you receive a late payment penalty.

What happens if I cannot pay the full amount I owe?
You can arrange to make a payment plan with us if you cannot pay the full amount you owe.

How can I set up a payment plan?
Call the toll-free number listed on the top right corner of your notice to discuss payment options or learn more about payment arrangements.


Tips for next year

Consider filing your taxes electronically. Filing online can help you avoid mistakes and find credits and deductions that you may qualify for. In many cases you can file for free. Learn more about e-file.

 

Page Last Reviewed or Updated: 06-Mar-2014

The Help With 1040x First Time

Help with 1040x first time Publication 970 - Introductory Material Table of Contents Future Developments What's New Reminders IntroductionComparison table. Help with 1040x first time Ordering forms and publications. Help with 1040x first time Tax questions. Help with 1040x first time Useful Items - You may want to see: Future Developments For the latest information about developments related to Publication 970, such as legislation enacted after it was published, go to www. Help with 1040x first time irs. Help with 1040x first time gov/pub970. Help with 1040x first time What's New Lifetime learning credit. Help with 1040x first time  For 2013, the amount of your lifetime learning credit is gradually reduced (phased out) if your modified adjusted gross income (MAGI) is between $53,000 and $63,000 ($107,000 and $127,000 if you file a joint return). Help with 1040x first time You cannot claim a credit if your MAGI is $63,000 or more ($127,000 or more if you file a joint return). Help with 1040x first time This is an increase from the 2012 limits of $52,000 and $62,000 ($104,000 and $124,000 if filing a joint return). Help with 1040x first time For more information, see chapter 3, Lifetime Learning Credit . Help with 1040x first time Business deduction for work-related education. Help with 1040x first time  For 2013, if you drive your car to and from school and qualify to deduct transportation expenses, the amount you can deduct for miles driven from January 1, 2013 through December 31, 2013 is 56. Help with 1040x first time 5 cents per mile. Help with 1040x first time See chapter 12, Business Deduction for Work-Related Education , for more information. Help with 1040x first time Reminders Form 1098-T, Tuition Statement. Help with 1040x first time  When figuring an education credit or the tuition and fees deduction, use only the amounts you paid and are deemed to have paid during the tax year for qualified education expenses. Help with 1040x first time In most cases, the student should receive Form 1098-T from the eligible educational institution by January 31, 2014. Help with 1040x first time An institution my choose to report either payments received during calendar year 2013 (box 1), or amounts billed during the calendar year 2013 (box 2), for qualified education expenses. Help with 1040x first time However, the amounts in boxes 1 and 2 of Form 1098-T might be different than the amount you actually paid and are deemed to have paid. Help with 1040x first time In addition, the Form 1098-T should give you other information for that institution, such as adjustments made for prior years, the amount of scholarships or grants, reimbursements, or refunds, and whether the student was enrolled at least half-time or was a graduate student. Help with 1040x first time The eligible educational institution may ask for a completed Form W-9S, Request for Student's or Borrower's Taxpayer Identification Number and Certification, or similar statement to obtain the student's name, address, and taxpayer identification number. Help with 1040x first time Hope Scholarship Credit. Help with 1040x first time  For 2013, the Hope Scholarship Credit is not available. Help with 1040x first time However, you may be able to claim an American opportunity or lifetime learning credit. Help with 1040x first time See chapter 2, American Opportunity Credit , and chapter 3, Lifetime Learning Credit , for more information. Help with 1040x first time Estimated tax payments. Help with 1040x first time  If you have taxable income from any of your education benefits and the payer does not withhold enough income tax, you may need to make estimated tax payments. Help with 1040x first time For more information, see Publication 505, Tax Withholding and Estimated Tax. Help with 1040x first time Photographs of missing children. Help with 1040x first time  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Help with 1040x first time Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Help with 1040x first time You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Help with 1040x first time Introduction This publication explains tax benefits that may be available to you if you are saving for or paying education costs for yourself or, in many cases, another student who is a member of your immediate family. Help with 1040x first time Most benefits apply only to higher education. Help with 1040x first time What is in this publication. Help with 1040x first time    Chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions , explains the tax treatment of various types of educational assistance, including scholarships, fellowships, and tuition reductions. Help with 1040x first time   Two tax credits for which you may be eligible are explained in chapter 2, American Opportunity Credit , and chapter 3, Lifetime Learning Credit . Help with 1040x first time These benefits, which reduce the amount of income tax you may have to pay, are: The American opportunity credit, and The lifetime learning credit. Help with 1040x first time    Ten other types of benefits are explained in chapters 4 through 12. Help with 1040x first time These benefits, which reduce the amount of income tax you may have to pay, are: Deduct student loan interest; Receive tax-free treatment of a canceled student loan; Receive tax-free student loan repayment assistance; Deduct tuition and fees for education; Establish and contribute to a Coverdell education savings account (ESA), which features tax-free earnings; Participate in a qualified tuition program (QTP), which features tax-free earnings; Take early distributions from any type of individual retirement arrangement (IRA) for education costs without paying the 10% additional tax on early distributions; Cash in savings bonds for education costs without having to pay tax on the interest; Receive tax-free educational benefits from your employer; and Take a business deduction for work-related education. Help with 1040x first time Note. Help with 1040x first time You generally cannot claim more than one of the benefits described in the list above for the same qualifying education expense. Help with 1040x first time Comparison table. Help with 1040x first time   Some of the features of these benefits are highlighted in Appendix B, Highlights of Education Tax Benefits for Tax Year 2013 , later, in this publication. Help with 1040x first time This general comparison table may guide you in determining which benefits you may be eligible for and which chapters you may want to read. Help with 1040x first time When you figure your taxes, you may want to compare these tax benefits so you can choose the method(s) that gives you the lowest tax liability. Help with 1040x first time If you qualify, you may find that a combination of credit(s) and deduction(s) gives you the lowest tax. Help with 1040x first time Analyzing your tax withholding. Help with 1040x first time   After you estimate your education tax benefits for the year, you may be able to reduce the amount of your federal income tax withholding. Help with 1040x first time Also, you may want to recheck your withholding during the year if your personal or financial situation changes. Help with 1040x first time See Publication 919, How Do I Adjust My Tax Withholding, for more information. Help with 1040x first time Glossary. Help with 1040x first time   In this publication, wherever appropriate, we have tried to use the same or similar terminology when referring to the basic components of each education benefit. Help with 1040x first time Some of the terms used are: Qualified education expenses, Eligible educational institution, and Modified adjusted gross income. Help with 1040x first time   Even though the same term, such as qualified education expenses, is used to label a basic component of many of the education benefits, the same expenses are not necessarily allowed for each benefit. Help with 1040x first time For example, the cost of room and board is a qualified education expense for the qualified tuition program, but not for the education savings bond program. Help with 1040x first time   Many of the terms used in the publication are defined in the glossary near the end of the publication. Help with 1040x first time The glossary is not intended to be a substitute for reading the chapter on a particular education benefit, but it will give you an overview of how certain terms are used in discussing the different benefits. Help with 1040x first time Comments and suggestions. Help with 1040x first time   We welcome your comments about this publication and your suggestions for future editions. Help with 1040x first time   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Help with 1040x first time NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Help with 1040x first time Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Help with 1040x first time   You can send your comments from www. Help with 1040x first time irs. Help with 1040x first time gov/formspubs/. Help with 1040x first time Click on “More Information” and then on “Comment on Tax Forms and Publications”. Help with 1040x first time   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Help with 1040x first time Ordering forms and publications. Help with 1040x first time   Visit www. Help with 1040x first time irs. Help with 1040x first time gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. Help with 1040x first time Internal Revenue Service 1201 N. Help with 1040x first time Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Help with 1040x first time   If you have a tax question, check the information available on IRS. Help with 1040x first time gov or call 1-800-829-1040. Help with 1040x first time We cannot answer tax questions sent to either of the above addresses. Help with 1040x first time Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 525 Taxable and Nontaxable Income 550 Investment Income and Expenses 590 Individual Retirement Arrangements (IRAs) Form (and Instructions) 1040 U. Help with 1040x first time S. Help with 1040x first time Individual Income Tax Return 1040A U. Help with 1040x first time S. Help with 1040x first time Individual Income Tax Return 1040EZ Income Tax Return for Single and Joint Filers With No Dependents 1040NR U. Help with 1040x first time S. Help with 1040x first time Nonresident Alien Income Tax Return 1040NR-EZ U. Help with 1040x first time S. Help with 1040x first time Income Tax Return for Certain Nonresident Aliens With No Dependents 2106 Employee Business Expenses 2106-EZ Unreimbursed Employee Business Expenses 5329 Additional Taxes on Qualified Plans and Other Tax-Favored Accounts 8815 Exclusion of Interest From Series EE and I U. Help with 1040x first time S. Help with 1040x first time Savings Bonds Issued After 1989 8863 Education Credits 8917 Tuition and Fees Deduction Schedule A (Form 1040) Itemized Deductions  See chapter 13, How To Get Tax Help , for information about getting these publications and forms. Help with 1040x first time Prev  Up  Next   Home   More Online Publications