Deceased Tax Payer

[Tax Prep by Deb]

I hope someone can help me. I have kind of an interesting situation. I have some clients who referred their father to me to do his taxes.

When he came in he brought me his info and that of his daughters who had died in 2006. Everything looked pretty simple, but before I could complete her tax return the father died (daughter died in 2006, father died in 2007) which now means my client, the only living heir, is having to file returns for both of them.

His sister dies without a will and basically no estate other than a life insurance policy that was left to the dad, for which he got the distribution and re-invested it into another life insurance policy that was left to my client.

I can wrap the sister's tax return up dealing with only one year, so I'm assuming that her brother, my client, can file as her representative and she will have a small refund coming.

The problem I see is with the dad's. He has taxable income in 2006 and will also have taxable income in 2007. Can I file a tax return for both of these years indicating date of death and that he is deceased? Or does an estate return need to be opened and file from there? Again he didn't have anything other than pension and life insurance that his son was the benficiary of. I'm not really sure how to proceed with this, can someone guide me which way to go?

Thanks in advance, and it's so good to find all of you again!

Deb!

[RitaB]

Deb, unless I am missing something, the dad will have to file personal returns for both 2006 and 2007, and since he's not available to sign, I think you are correct to put date of death on top of both, and the personal rep or "person in charge of decedent's property" will then be able to sign.

You might check to see if he had savings bonds, because he can elect to report the accrued interest through the date of death on the final 1040. Might really save someone some money.

The estate, if even necessary (because of income received on probate assets after death), starts "at the moment of death", which is in 2007. I don't think you'll need to worry about that one. This is really interesting, and I hope others will add to this. I wish I knew more about it myself. I'm about to do a 1041 for a lawyer who died without a will. (?!!?) Has (had) about 35 investment accounts with no beneficiaries named on any of the accounts.

I am looking at The Tax Book section 21, and I think Pub 559 will help you, too. Sorry this is all I know at the moment. (Except that I am tired and grouchy.)

[Tax Prep by Deb]

Thanks so much for your imput!

As to be tired and grouchy, so am I. This has seemed like an extremely long tax season to me and then when the community disappeared off ATX's site I felt lost and all alone.

I really do appreciate any thoughts anyone has and I have learned so much from all of your experience.

Again, thanks for the response and I will look at the info you suggested!

Deb!

[RitaB]

Thanks so much for your imput!

As to be tired and grouchy, so am I. This has seemed like an extremely long tax season to me and then when the community disappeared off ATX's site I felt lost and all alone.

I really do appreciate any thoughts anyone has and I have learned so much from all of your experience.

Again, thanks for the response and I will look at the info you suggested!

Deb!

You are very welcome, Deb, I wish I knew more, and I'm sure I'm going to have to do a lot of studying on my 1041, but I do know a little about the savings bond issue from something I dealt with earlier in the season.

Yes, when ATX pulled the plug on the forum, I couldn't believe it! I was about to do a search for info on what we're talking about now. There was a wealth of information in the archives. It almost makes me sick to think that all that is lost. Oh well, I'll just drag out Pubs and books...