It should go without saying that a person's tax year ends on the day that they die. It should also go without saying that a deceased individual cannot file a tax return on their own. So, what tax forms need to be filed after the death of a loved one?
1. File Form 1040 for Pre-Death Earnings
The executor of the will, or the court-appointed personal representative, will need to file a normal Form 1040 for the income earned by the individual prior to their death. If there is a surviving spouse, the spouse can filed jointly like in previous years. If the decedent is a single person, a standard 1040 would be filed like any other year.
2. File Form 1310 for a Refund
Form 1310 (Statement of a Person Claiming Refund Due a Deceased Taxpayer) will need to be included in the event a refund is due to the deceased individual and is being claimed by the spouse or personal representative.
3. Obtain a Separate TIN for the Estate
All of the decedent's assets will belong to his/her estate after they pass. The estate acts as a separate legal entity for tax purposes and will require a separate Tax ID Number (TIN) for income reporting purposes.
4. File Form 1041 for Post-Death Earnings
While the assets are in the estate, it's likely that they will generate some income from interest, dividends, etc. This fiduciary/estate return will report that income since it is separate from the normal 1040 return filed for individual taxes.
5. File Form 706 for Estate Taxes and/or Portability
Not everyone is going to qualify for having to file a estate tax return (assets in excess of $5.45 million), but, regardless of the size of your estate, if the surviving spouse wishes to elect portability (the ability to carry over any unused exclusion from the decedent spouse), Form 706 will still have to be filed for that limited purpose.
It's best to work with a CPA skilled in post-death tax planning and preparation. Trying to navigate this process alone can result in filing errors or omissions.