A little addition to the excellent answer above:
It sounds like it would be best to file an extension. You’ll
need to estimate, to the best of your ability, what you think they owe. Use
TurboTax to do a mock return and pay the balance due with the extension. (See extension instructions below.) That
will buy you enough time to get everything in order.
Upon their death, a new taxpaying entity (an estate) was automatically
created to make sure taxes get paid. You will need to check with your state law. In
the case of a person with a small or no estate, and no disagreement
among the surviving relatives, it may be a simple form that you fax to
the county clerk's office or the clerk of the probate court. Look on
your state's government web site for information about small estates.If you have to borrow money from the estate or lend money temporarily to the estate to pay the taxes, keep good records. Income is taxed either on the taxpayer's
final return, or on the return of the beneficiary (possibly you) who acquires the
right to receive the income after death.
Only income earned between the beginning of the year and the
date of death should be reported on your parents' final return.
As far as deductions go, all deductible expenses paid before death can be
written off on the final return. Estimate the mortgage or call the mortgage company, though they probably received a Form 1098 already if they had one. In addition, medical bills paid within one
year after death may be treated as having been paid by the decedent at the time
the expenses were incurred. That means the cost of a final illness can be
deducted on the final return even if the bills were not paid until after death.
If deductions are not itemized on the final return, the full standard
deduction may be claimed, regardless of when during the year, the taxpayer
died. Even if the death occurred on January 1, the full standard deduction is
available. The same goes for the taxpayer's personal exemption. TurboTax will take care of these particulars.
To file your extension, select Easy Extension
from the MyTurboTax drop-down menu.
If you don't see a "My TurboTax"
menu, search for extend inside your
program and then click or tap the "Jump
to" link.
You can also go the Easy Extension site
to e-file your extension or print out Form 4868 from the IRS, fill it out, and
mail it on or before April 18. Complete mailing instructions are on the
printout.
Note: An IRS extension gives you until
October 16 to file, but it won't give you until October to pay your taxes.
Those are still due April 18.
