The Decedent's Final 1040 Tax Return

Estate Representative: If a court appoints a personal representative or other estate administrator, that person must file tax returns for the decedent. If the decedent was married at the time of death, the personal representative and surviving spouse may file joint returns if both elect to do so. If the surviving spouse remarried before the end of the tax year, the personal representative must file for the decedent as married filing separately. An estate executor or representative named in a will has no authority over the estate until appointed by a court. If probate is not required, the named representative never receives court authority and is considered a person in charge of decedent’s property (see below).

Surviving Spouse: If there is no court-appointed representative by the deadline for the return, the spouse can file a joint return with the decedent as long as he/she did not remarry before the end of the tax year. A spouse can file a joint return even if he/she expects an estate representative to be appointed. The estate representative, once appointed, may revoke the election to file jointly. If the surviving spouse is the appointed personal representative, he/she files for decedent as personal representative and not as surviving spouse.

Person in Charge of Decedent’s Property: If there is no court-appointed representative and no surviving spouse, a "person in charge of the decedent’s property" must file the tax returns. This "person" is usually one of the heirs chosen informally by the others to act in this capacity. Filing by a person in charge of decedent’s property should only be done for estates which will not require probate. If the return shows a refund, the "person" is required to verify on Form 1310 that a court has not and will not appoint a personal representative. The IRS uses the term "personal representative" in its publications and instructions to refer to both appointed representatives and persons in charge of decedent’s property. Under state law, "personal representative" generally refers only to someone with court authority.

Generally the rules for deductions for a decedent are the same as those for individuals. Deductions are allowed if they were paid prior to decedent’s death and would have been deductible by the decedent as of the date of death. 

Exceptions:

• Medical costs paid by the decedent’s estate within one year of death can be deducted either on Schedule A of the decedent’s 1040, or on the federal estate tax return ( IRS Form 706 ). If such costs are deducted on the decedent’s 1040, they cannot automatically be deducted on the final Form 1040—each expense must be deducted on the Form 1040 in the year the expense was incurred. When such expenses are taken on a 1040, a statement must be attached to the return stating that the expenses have not been and will not be claimed on the federal estate tax return (attach the statement even if no federal estate tax return is required). A surviving spouse or parent who paid medical expenses for a spouse or dependent child can deduct the expenses in the year paid without attaching an election statement.

• If the decedent was receiving a pension or annuity, any investment lost because of no surviving annuitant can be deducted as a miscellaneous itemized deduction not subject to the 2% AGI limitation. 

Funeral, probate, and other estate expenses may be deductible on the federal estate tax return but are not deductible on the Form 1040. If liability for deductible expenses passes to the estate or other beneficiary as a result of the transfer of property or income rights belonging to the decedent, these expenses are deductible by the estate or beneficiary.

The standard deduction and personal exemption can be claimed for the full yearly amount as if death had not occurred. Decedent cannot use the standard deduction if the surviving spouse files a separate return and itemizes deductions. Decedent cannot claim the personal exemption if someone else can claim the decedent as a dependent.

Write "DECEASED," the decedent’s name, and the date of death across the top of the tax return. In addition, on a joint return write the names, address, and Social Security numbers of the decedent and surviving spouse as usual. If the return is not joint, write the decedent’s name in care of the person filing the form, and that person’s address.

Estate Representative: If there is a court-appointed estate representative, he/she must sign the return and include his/her title. If a joint return is filed, the personal representative signs for the decedent, and the surviving spouse signs as usual in the space for his/her signature. If the spouse is also the personal representative, he/she should sign the return twice. The words "Filing as Surviving Spouse" should not be written on the signature line.

Surviving Spouse: If there is no court-appointed representative, write "Filing as Surviving Spouse" in the space for decedent’s signature. Surviving spouse signs in the space for his/her signature.

Person in Charge of Decedent’s Property: Sign name followed by the words, "Personal Representative."

If the tax return shows a refund, Form 1310 or other documentation may be required depending on who files and signs the return.

Estate Representative: If there is a court-appointed representative, a court certificate showing the representative’s appointment or authority must be attached to the return (usually a certified copy of Letters Testamentary or Letters of Administration). Form 1310 is not required if the court certificate is attached to an original return. A copy of a will is not sufficient proof of court authority. The executor or representative named in a will has no authority over the estate until appointed by a court. If probate is not required, the named representative never receives court authority and is considered a person in charge of the decedent’s property.

Surviving Spouse: If there is no personal representative and a joint return is filed by the surviving spouse, no additional documentation is required.

Person in Charge of Decedent’s Property: If there is no court-appointed representative and no surviving spouse, Form 1310 and a copy of the death certificate must be attached to the return.

Form 1310: Submit Form 1310 to request a check issued jointly to be reissued to the surviving spouse. Attach a copy of the death certificate.

Decedent’s 1040 must be filed on forms for the appropriate tax year. The return cannot be filed early so that the personal representative can be discharged and the estate closed.