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Apr 22, 2021
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when someone passes away, their tax headaches don't die with them.

In fact, those obligations can further complicate the lives of survivors: Federal estate taxes may be due and state inheritance taxes could come into play as well.

“You still have to reconcile tax liabilities in the year of death when you had income," says Mark Steber, Chief Tax Information Officer at Jackson Hewitt. "Sooner or later someone will have to clean it up, and it usually falls to a family member.”

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Melissa Burgess is one of those people. When her father passed away suddenly in early 2018, she filed his 2017 return while a lawyer helped file his 2018 return through her father’s estate.

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Melissa Burgess, whose father died in 2018
This is the last piece of the puzzle for my father’s estate. How am I still having to deal with this three years later?
But Burgess, who lives in Buffalo, New York, is still waiting on her father’s 2017 tax refund from the IRS. And the pandemic has made it even more challenging for her and her sister to get in contact with the agency since it has been overwhelmed by sweeping tax code changes even as it sends stimulus checks to millions.

“It’s been very frustrating,” says Burgess, 30, who is a clerk at a local library. “If the pandemic hadn’t happened, then maybe things would be resolved by now.”

Adding to her frustrations, the IRS also mistakenly sent a $1,200 stimulus check to her dead father last spring that she had to send back, she says.

“This is the last piece of the puzzle for my father’s estate. How am I still having to deal with this three years later? My dad is owed this money. I’m not going to give up until I get it.”

Melissa Burgess, in the middle, with her sister and father.
Melissa Burgess, in the middle, with her sister and father.
MELISSA BURGESS
Filing the final return
Filing the final return
The filing of the deceased taxpayer's final return typically falls to the executor or administrator of the estate. If neither is named, then it’s taken over by a survivor of the deceased, according to Lisa Greene-Lewis, a CPA at TurboTax.

“This likely impacted many families in 2020 due to the pandemic,” Greene-Lewis says.

Those survivors are not only stressed about complicated tax paperwork, but they're also in mourning.


“The final year of a tax return is a sensitive topic because you’re dealing with emotions and fragile feelings,” says Steber, who says family members who are suddenly responsible for their loved ones' taxes shouldn't go it alone. “When the time comes, get experienced help.

The final return is filed on IRS Form 1040, the same one that would have been used if the taxpayer were alive. The difference is that "deceased" is written after the taxpayer's name, Greene-Lewis says.

If the taxpayer was married, the widow or widower may file a joint return for the year of death. For the two years following a person's death, the surviving spouse can file as a qualifying widow or widower, which would allow them to continue to use the same tax brackets that apply to married-filing-jointly returns.

Estate taxes.
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The bigger the estate, the more complex
The bigger the estate, the more complex
The bigger the estate and the larger the income is for a decedent, the more complex the situation will likely become, which creates a greater need for a tax professional, Steber says.

“Make this a part of your will and put an executor in charge,” Steber advises.

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Eric Pierre, founder, CEO and principal of Pierre Accounting
The pandemic has gotten people’s attention. Anyone can die at a moment's notice. But now that people are dying of COVID, I think it really woke them up about that reality to make sure they have a plan in place.
The estate tax, for instance, is charged on a person's assets when they die. A 40% federal estate tax applies to estate values that exceed $11.7 million, or $23.4 million per married couple, though fewer than 2,000 households are expected to pay estate taxes for last year, according to the Tax Policy Center.

The Biden administration is expected to propose a lower estate tax exemption, which would subject more estates to tax after a death. Biden has called for lowering the exemption to $3.5 million for estates.

Eric Pierre, founder, CEO and principal of Pierre Accounting, says his firm has received an increase in estate planning this year.


“The pandemic has gotten people’s attention. Anyone can die at a moment's notice. But now that people are dying of COVID, I think it really woke them up about that reality to make sure they have a plan in place.”

Distinguishing between who needs an estate versus who needs a simple will depends on individual circumstances, Pierre adds. For those who own real estate or substantive assets, they should have an estate, he recommends.

When is the tax deadline?
When is the tax deadline?
The deadline to file a final return is the tax filing deadline of the year following the taxpayer's death, which would be May 17 for 2020 returns after the IRS extended the deadline this tax season.



2020 taxes are complicated but USA TODAY answers your FAQs to make it easy(1:00)
Because of the coronavirus pandemic, 2020 may be a tax year like no other. Here are answers to some of your top questions.
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Sign the tax return
Sign the tax return
If an executor or administrator is involved, he or she must sign the return for the decedent. When a joint return is filed, the spouse must also sign.

When there isn’t an executor or administrator, whoever is responsible for filing the return should sign the return and note that he or she is signing "on behalf of the decedent."

If a joint return is filed by the surviving spouse alone, he or she should sign the return and write "filing as surviving spouse" in the space for the other spouse's signature.

The words tax refund spelled out in block letters next to a red mug
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What if a tax refund is due?
What if a tax refund is due?
There's one more step if a refund is due.

If the decedent is owed the money, it can be claimed using IRS Form 1310, Statement of a Person Claiming Refund Due a Deceased Taxpayer, according to Greene-Lewis.

Although the IRS says that surviving spouses filing a joint return don’t have to file with this form, tax experts suggest it’s still a good idea to include to head off possible delays.

Who gets the refund?
Who gets the refund?
The refund, if it is solely in the name of the decedent, will be distributed to heirs or beneficiaries, according to Pierre. If the decedent has a surviving spouse, they can get the refund on a married filing joint return.

Yes, it's tax season once again.
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What happens if a decedent owes taxes?
What happens if a decedent owes taxes?
If a decedent owes taxes, the tax bill is supposed to be settled by the decedent's estate's executor, says Pierre.

In the event that the decedent has insufficient funds to cover the federal income and estate taxes, the relatives aren’t responsible for the remaining balance, Pierre adds.

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Eric Pierre, founder, CEO and principal of Pierre Accounting
If you’re alive and well, get a life insurance policy and at least have a simple will.
The executor of the estate can be held liable if the executor distributes assets to heirs and beneficiaries before paying the taxes, or if the executor pays off other debts of the estate before paying the tax liabilities, or if the executive is aware of the insufficient funds and inability to pay the taxes but spends the assets otherwise, he says.

To be sure, a relative can be on the hook for one of the following: co-signing a loan with the decedent if they were a joint account holder; a resident of a community property state where a surviving spouse can be held liable for debts if the state requires the surviving spouse to pay off debts; or if they share in the debt, according to Pierre.

Know somebody who doesn't have a plan yet? Share this story.

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“If you’re alive and well, get a life insurance policy and at least have a simple will,” says Pierre. “Depending on your wealth, look at getting an estate. If you don’t and something unexpected happens, it could take years to figure out how assets should be settled.”

“If you don’t prepare,” Pierre adds, “you’ll be preparing to fail.”

Published 9:31 AM GMT+5:30 Apr. 22, 2021 Updated 8:08 PM GMT+5:30 Apr. 22, 2021

Stimulus checks sent to 156M Americans, including Social Security beneficiaries and 'plus up' COVID payments
The IRS has issued more than 156 million stimulus payments under President Biden’s American Rescue Plan. Here's how to check your payment status.
Jessica Menton, USA TODAY
Published 7:17 pm UTC Apr. 7, 2021 Updated 8:37 pm UTC Apr. 7, 2021


2020 taxes are complicated but USA TODAY answers your FAQs to make it easy
Because of the coronavirus pandemic, 2020 may be a tax year like no other. Here are answers to some of your top questions.
STAFF VIDEO, USA TODAY
The Internal Revenue Service sent out COVID-19 relief checks to more than 25 million Americans in the fourth round of payments made under President Joe Biden’s American Rescue Plan, the agency said Wednesday.

That brings the total disbursed payments from the latest stimulus package to more than 156 million payments, worth about $372 billion. The payments, which total up to $1,400 each per individual, were distributed mostly by direct deposits and paper checks.

The fourth batch of payments began processing on Friday, with an official payment date of April 7, with some people receiving direct payments in their accounts earlier as provisional or pending deposits, according to the IRS.

It included nearly 24 million payments via direct deposit, with a total value of over $33 billion. More than 1 million paper checks were also sent, totaling nearly $3 billion.

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Who received the bulk of the checks?
The largest chunk of payments in the fourth round went to Social Security beneficiaries who didn’t file a 2020 or 2019 tax return and didn’t use the Non-Filers tool last year, the IRS said.

More than 19 million payments, totaling more than $26 billion, went to these beneficiaries, including Social Security retirement, survivor or disability beneficiaries, according to the agency.

More than 3 million payments, worth nearly $5 billion, went to Supplemental Security Income beneficiaries. And nearly 85,000 payments, worth more than $119 million, went to Railroad Retirement Board beneficiaries.

Stimulus checks have been sent to 156 million Americans as of April 7.
Stimulus checks have been sent to 156 million Americans as of April 7.
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What about VA beneficiaries?

Payments for VA beneficiaries who didn’t file a 2020 or 2019 tax return and didn’t use the Non-Filers tool last year will be disbursed on April 14, the IRS said.

“If no additional issues arise, the IRS expects to begin processing these VA payment files at the end of this week,” the agency said. “Because the majority of these payments will be disbursed electronically, they would be received on the official payment date of April 14.”

IRS distributes more ‘plus-up’ payments
The fourth batch of payments also included more than 1 million “plus-up” payments worth more than $2 billion for people who were eligible for additional money now that their 2020 tax returns have been processed.

More than 1 million stimulus checks – approximately $3 billion – were issued to people who recently filed tax returns to get their payments because the government did not have them on record.

Payments for this group and the “plus-up” payments will continue on a weekly basis going forward, the IRS said, as the agency continues processing tax returns from 2020 and 2019.

How do I check the status of my payment?
Get updates on the status of your next stimulus payment using the IRS "Get My Payment" tool. To use it, enter your full Social Security number or tax ID number, date of birth, street address and ZIP code.

But the Get My Payment tool won't be updated until this weekend with information for VA beneficiaries expecting payments next week, the agency said.

For those who are eligible, the tool will show a "Payment Status" of when the payment has been issued and the payment date for direct deposit or mail, according to the IRS's frequently asked questions.

The payments amount to $1,400 for a single person or $2,800 for a married couple filing jointly, plus an additional $1,400 for each dependent child. Individuals earning up to $75,000 get the full payments, as do married couples with incomes up to $150,000. Payments decline for incomes above those thresholds, phasing out above $80,000 for individuals and $160,000 for married couples.

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