Deceased Taxpayer & Form

[Lion EA]

Taxpayer died this January. She has some back years to file. I'm preparing 2020 1st, because there's an IRS letter stating a balance due but taxpayer hasn't filed since about 2016. Taxpayer had been in contact with IRS, per her mother; but that's all we know. Then, I'll prepare 2019, with the 17 July deadline. Administrator is SIL in FL. Family prefers refunds go to mother (deceased cared for mother, paid some of mother's bills, and lived with mother the last few years in CT).

Form 1310: can I choose for refund to go to mother? I'll be uploading all years to SIL in FL to sign and mail and not trying to e-file any. (2020 will probably reject anyway due to ID theft.)

Or, without choosing mother, will refund go to Administrator or to The Estate of Joan X Doe?

Do you suggest registered mail? Certified? Return receipt?

Anything else I need to know to deal with SIL in FL when I'm up here in CT?

I am NOT going to deal with IRS re ID theft when I don't know anything about what happened in 2020. SIL can deal with that for the cheap price I quoted her.

Client was a long-term client, but would file every couple years or three. Then stopped filing after 2016; would call me to file an extension each year, but didn't get back to me with her tax info. Teacher with good w/h and federal refunds, so IRS wasn't chasing her. (CT owed a little or refunded a little, but no letters from CT in her documents.)

All suggestions and comments welcome. Thank you for reading!

[Catherine]

Refund should go to the estate, and the executor/trix can then direct the refund to whomever it should go.

[Sara EA]

Is there an actual estate and court-appointed administrator?  If so, the estate gets the refund and the admin directs it to the heirs as directed by the will or state law.  If the heirs want the mother to get it all, the easiest way is just to give it to her themselves when they get their distributions.  Sometimes all the deceased's assets were titled TOD or with named beneficiaries so there is no Probate estate.  In that case a responsible party signs the 1310 and agrees that the funds will be distributed in accordance with the will or state law.  One person can't just decide to claim the funds and keep them.

If there is a court-appointed admin, all the returns with refunds have to be paper filed with a copy of the court appointment attached.  (It's not on the list of the forms that can be attached via 8453 or pdf.)  All of the CT returns must be paper filed as well with a copy of the Federal 1310.  If there is a balance due, go ahead and efile.

[Lion EA]

There's a court-appointed administrator, the sister-in-law and brother (SIL is doing it all for her hubby, but they both appear on the court paper). They did go to probate. I'm waiting on them to answer if there was a will; client was only 50 or in early 50's when she died suddenly of a heart attack. With SIL in FL and me in CT, I'm going to upload returns for her to sign and mail in. I thought Form 1310 would require paper filing, plus 2020 with possible ID theft. Leaving everything except actual tax prep to the SIL. Don't even want to try e-filing with the SSA freezing SSNs so often and the suspicion that a 2020 return was filed/ID theft.

If the refunds go to the estate, do we need to file Form 1310? Will the IRS mail the check to The Estate of Joan X. Doe in care of the SIL administrator? I think it's only the mother and brother, and brother and SIL want to give all proceeds to mother.

Thank you for confirming that a copy of the court appointment should be attached. What about a copy of the death certificate?

Every single client has something new this year!

[BrewOne]

I would first get a Form 56 on file with IRS if that hasn't been done.  Haven't been asked to provide a death certificate in some time, but if they hadn't reached retirement age, not sure if there is still automatic notification from Social Security.

One general note: registered mail is for items with tangible value over the limit for insured mail; although a lost tax return could be costly, the IRS will not reimburse.  Certified mail with return receipt will do the trick.

[TexTaxToo]

See Pub 559

Quote

Form 1310 doesn't have to be filed if:

You are a court-appointed or certified personal representative filing the decedent’s original return and a copy of the court certificate showing your appointment is attached to the return.

Death certificate. When filing the decedent's final income tax return, don't attach the death certificate or other proof of death to the final return. Instead, keep it for your records and provide it if requested.

If the amount the brother would inherit is substantial and would be subject to the gift tax if he gave it to the mother, they should look into disclaiming the inheritance to avoid the gift tax.  This must be done in writing within 9 months (see https://www.law.cornell.edu/uscode/text/26/2518)

[Lion EA]

All of you are very helpful. Can't remember when I had a client die (without the lawyer insisting that everything was done via his office).

SIL has two emails: one has been bouncing back since the weekend, and the other says its still trying to deliver for 72 hours! She was in such a rush. Now to call her...

[Lion EA]

One more: do I use the administrator's FL address for everything, or are there places where I should use the decedent's CT address -- so, returns are paper-filed to the correct address, for instance. Form 56 is to be mailed to the address where the decedent would file tax forms, for instance, so is that the address that a FL resident would file at or the address a CT resident would file at?

[Sara EA]

If court appointed, no need for the 1310.  The refund will be payable to the estate.  In my experience, though, the IRS always asks for the 1310.  You will have to use the admin's address so any correspondence doesn't go to the deceased's old address.  On the street address line I usually put c/o [name of admin] and then his address.  The forms should go to the IRS address used by CT residents.  I have never had to file a death certificate.

 

Since refunds will go to the estate, you should get an EIN so son can open a bank account.

Better find out if there was a will.  If the person died intestate and had no spouse or children, CT law says the parent inherits all.

 

[Lion EA]

No will. No spouse or children. All to parent, ultimately. So, IRS will send refund to estate? Then administrator can pay bills (car/boat tax due this month, for instance, and my prep fees) and distribute remainder to mother when estate closes?

State pension (teacher) had mother as beneficiary, so that's happening outside of estate from date of death forward.

Administrator opened an estate checking account on advice of lawyer. I asked about EIN in my list of questions to admin. She's in FL and having internet issues due to weather/flooding, but I got an email through to her yesterday on an alternate email address.

Do I use the EIN anyplace on the 1040? (I'm prepping 2020 and 2019 now.) Death was 2023.

I have the admin address/phone/email on returns, but was worried that would confuse CT and the IRS mailing address. I am using c/o and making it fit the fields.

Thank you, thank you for leading me through this. I'm saving all your notes for the future, a great how-to text.

[Sara EA]

Since the returns will be paper filed, no point in using the estate bank account because paper checks will be issued anyway (no direct deposit).  There must be an EIN because a bank account couldn't be opened without a TIN.  It doesn't go on the 1040 unless there is income paid after the death but reported to the decedent.  For example, a brokerage account may report the whole year worth of dividends to the decedent, in which case you put the whole amount on the 1040 and then back out the amount paid after death, using the explanation "IRD to be reported by EIN...."  That won't be an issue until 2023.

Don't worry about confusing CT or IRS.  IRS doesn't pay much attention to state entries, and CT won't complain if you report income to them.