FILING A FINAL TAX RETURN IS PART OF BEING AN EXECUTOR
Jan. 14, 2021
When you serve as an executor, it is your job to resolve the legal and financial issues of the deceased person. You must settle their debts and distribute their property to their family members. You may need to pay bills on their behalf, close bank accounts, and physically secure property against vagrants or thieves.
Additionally, one of your responsibilities will involve settling the tax obligations of the deceased. You will have to file a tax return on their behalf during estate administration.
Even Those without Significant Income Must File a Final Return
Many older adults who die are at a point in life where they don’t have to file income tax returns anymore. Other people who die may not have had to file taxes due to lack of employment.
Regardless of how someone earned money or their health when they died, a final tax return is typically necessary. The final tax return resolves any outstanding tax obligations and also serves the purpose of informing the IRS of a taxpayer’s death. You may also need to file taxes on behalf of the estate separately from the taxes for the deceased party.
Unmet Tax Obligations Might Pass Back to You
As the executor of the estate, you take responsibility for its liabilities and obligations. If there are taxes owed from the estate, any and all available assets should go to pay that tax done before family members and other beneficiaries receive any of the assets.
If you make the mistake of distributing assets before resolving tax obligations and other debts, you could be the one with the responsibility to repay the outstanding amount. Knowing your obligations and carefully documenting the steps you take as an executor will protect you from the potential legal consequences possible for executors.