Experience with elderly and deceased final tax return?

[Franklin]

My mom passed away this past December. She has been in an assisted living facility for 2 years and has not filed a tax return in a few years. She has virtually no income ($1000 month for SS and a $200 month pension). Her estate will be basically her house worth maybe $200K. I spoke with the estate attorney and we had set up a trust to avoid probate. He indicated no tax filing was necessary. Am i missing something here? Do we need to submit a tax return for her now that she is deceased? I can't see how she would owe any tax but perhaps I am missing some formality. Any experience would be welcome.

 

[Sunset]

She might qualify for tax refunds for all the years she didn't file including the year of death.
This will vary by State.

If you are executor, it's probably a good idea to do the final return, to show no taxes are due. It would be terrible if 3 years from now you get a notice that her estate owes a fine for not filing a return.

 

[Big_Hitter]

I seem to recall that if income from the decedents estate is under a certain threshold no tax filing is necessary

The same may apply to your mom's unfiled tax returns

Did you check with your accountant?

 

[joeea]

My mom passed away this past December. She has been in an assisted living facility for 2 years and has not filed a tax return in a few years. She has virtually no income ($1000 month for SS and a $200 month pension). Her estate will be basically her house worth maybe $200K. I spoke with the estate attorney and we had set up a trust to avoid probate. He indicated no tax filing was necessary. Am i missing something here?

Nope. Sounds perfectly reasonable.

My aunt passed away a couple of years ago. My dad was her executor, and I helped him. She had only Social Security for income, about $200k in the bank she gave to her church, and hadn't filed a tax return in years.

The estate attorney also said that there was no need to file a return. So we didn't. No problem.

 

[ncbill]

My relative for whom I was caregiver died just last week.

I liquidated their (very) modest investment portfolio last fall, so I'll have to file a return for them.

With no income other than SS retirement, I expect them to owe no federal taxes on those long-term capital gains, but will likely owe a few hundred bucks in state taxes.

Fortunately they had already moved their home & primary financial accounts into their revocable living trust.

But not their vehicle, so I'll have to file a simplified "small estate" affidavit in order to dispose of that.

Once I get back the death certificates, which takes up to 10 business days in my state.

 

[Franklin]

I seem to recall that if income from the decedents estate is under a certain threshold no tax filing is necessary

The same may apply to your mom's unfiled tax returns

Did you check with your accountant?

Thanks Big Hitter. I just spoke to my CPA and he said no filing or tax was due. The house would be adjusted to FMV and the value was below that required for tax. I just am not accustomed to things being that simple.

 

[Big_Hitter]

Thanks Big Hitter. I just spoke to my CPA and he said no filing or tax was due. The house would be adjusted to FMV and the value was below that required for tax. I just am not accustomed to things being that simple.

you bet - we went through this about 7 years ago when MIL passed away

 

[The Cosmic Avenger]

Here's a worst case scenario: the IRS comes after your mother's assets for the unfiled taxes. (If you don't file, they weight all the assumptions against you, as they should, and require you to file to show the assumptions wrong.) My father hadn't filed for about 10 years when he died. He had been a professional accountant, and told me he was due a small refund but it hadn't been worth his time to file. He told me shortly before he died that he was going to file for all the past years at once and get a refund, and I found that credible.

So after he passed, I didn't want to deal with the paperwork, so I found a tax attorney, and paid them $250. They negotiated with the IRS for me and basically made it go away. All of my father's assets were outside of probate, but it's my understanding that the IRS is one of the only entities who can pursue debts from funds that pass outside of probate, so there was a decent chance that they could have come after the TOD and POD accounts he left to me.

Basically, if the IRS tries to come after you, consider a tax attorney. (I hope they don't, of course, but just in case.)

 

[Clone]

I am not a tax expert, but in our case, the estate was it's own tax entity. There were yearly filings, and there was a final filing. Now, it may be in our case that the trust was generating income above some limit.


There may be something required to close the trust, but it does not look like there will be much, if any, tax implications. I know that we filed some sort of 'final' return.

 

[SecondCor521]

There may be something required to close the trust, but it does not look like there will be much, if any, tax implications. I know that we filed some sort of 'final' return.

There is a box that one checks on the final estate or trust tax return to indicate that it is final:

https://www.irs.gov/pub/irs-pdf/f1041.pdf

Box F, top middle under the name and address.