Debts are not directly passed on to heirs, but if there is any money in your Mother's estate, any bills (including tax bills), must be settled before any money is disbursed to beneficiaries from the estate.
You'll file a normal federal and state tax return for the deceased person based on their income and deductions until the date of their death (also called a decedent return).
Any income earned after this date is reported on a trust return Form 1041, US Income Tax Return for Estates and Trusts. You’ll need an Employer Identification Number from the IRS, which you can get here.
You may also need Form 56, which is used when either setting up or terminating a fiduciary relationship. It authorizes you to act as if you’re the taxpayer, allowing you to file income tax returns and pay taxes due with the returns.
This form isn't prepared with the decedent’s income tax return. It’ll need to be completed and mailed to the IRS office where the decedent’s tax return is filed.
Lastly, if the tax return for the decedent has a refund, you’ll need to complete Form 1310 - Statement of Person Claiming a Refund Due a Deceased Taxpayer. It can be completed in TurboTax.
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