Steps to Prepare Tax Returns for a Deceased Loved One

When a loved one passes away, a number of tasks must be completed by their executor or personal representative. One of these involves the preparation and filing of a final tax return. If you are charged with this unpleasant job, what steps should you follow? Here are a few things to do to reach the best conclusion with the least amount of worry.

1. Look at Prior Tax Returns

If you have access to the deceased taxpayer's prior year returns, these can give you a great deal of useful information to complete the current one(s). For instance, a prior tax return shows what sources of income the person had so you can locate all the relevant documents.

2. Gather Documents

After January 1st, look for tax documents that normally come in the mail to all taxpayers. In addition, the executor of the estate or personal representative should also be able to access things like bank statements, transactions through online platforms (like PayPal), and retirement account records. Even if you're not sure if a document is going to be relevant, set it aside to discuss with a tax preparer. It will be easier to do this now rather than later.  

3. Meet with a Tax Preparer

Now is the time to use a paid tax preparer even if you have done your own taxes in the past. There are specific rules about how a final tax return should be completed, by whom, and how to handle refunds or additional questions. Unless you're familiar with these procedures, work with someone who is. Their experience will help you approach the task with confidence and avoid unnecessary stress over it. 

4. Let the Preparer Lead

Once you engage with a tax preparer, talk with them about your feelings and needs during this difficult time. If you need to let them take the lead, they may be able to do many things that the taxpayer might do themselves under normal circumstances. For instance, a paid preparer can often call prior employers for copies of Forms W-2 or be appointed to talk with the IRS directly with concerns. 

Even though having to file income taxes for someone you've lost isn't an enjoyable job, it's an important one. And when you know what to do and who to ask for help, it will go smoothly and quickly. Learn more by speaking with an experienced accountant or tax preparation service.