Filing taxes for person who died prior to filing previous year taxes

[Matilda]

My sister died the end of January 2023 prior to submitting her 2022 tax forms.  I have completed her 1040 for 2022.  I have a couple questions: 

1. Do I mark her as deceased on the 2022 form even though she was alive the end of 2022? 

2. She is due a refund.  I know she will owe some tax for 2023 so can I still carry that refund forward?

3.  Is a regular 1040 filed for her 2023 tax up until the day she died, then a 1041 estate return for the remainder of 2023?  So two tax returns?

When I say I know she will owe tax for 2023 even though she died in Jan 2023, it is not due to income.  She was paying household employees and withholding tax so will have to pay what she withheld to the IRS.

[KrisD15]

1. No, do not select that she had passed in Tax Year 2022 since she did not pass until 2023. 

2. Yes, you can apply her 2022 refund to Tax Year 2023.

3. Yes, a final 1040 and, if required, 1041 will be filed for tax Year 2023. 

We are sorry for your loss. 

More information 

[hbl3973]

Matilda,

There are a couple of wrinkles to what you mention.  First of all, as instructed, do not mark your spouse as deceased.  Instead, you should follow the instructions given for Form 1040:

"If your spouse died in 2022 and you didn't remarry in 2022, or if your spouse died in 2023 before filing a return for 2022, you can file a joint return. A joint return should show your spouse's 2022 income before death and your income for all of 2022. Enter “Filing as surviving spouse” in the area where you sign
the return. If someone else is the personal representative, they must also sign."

As surviving spouse, you will not need to accompany this 2022 return with a death certificate.

The other wrinkle is how and whether to claim a refund.  In your case, as you will need to include Schedule H on the 2023 joint tax return (where you will mark the spouse as deceased), it is perfectly OK, and quite reasonable to have the refund applied to next year's taxes.  IRS website https://www.irs.gov/taxtopics/tc756 explains about Schedule H.

Hope this clears up and residual concerns.

[Matilda]

I hadn't seen your reply and I was looking closer at Turbotax. In the personal information section, under "Do any of these apply to "name"?   asked if the person "passed away prior to submitting this return"  When I said yes it asked the date and then put "DECEASED" her name and the date she passed on top of the return.  As a result I can no longer efile, and I have to take the refund.  

I was surprised because I also thought you are not considered deceased until the year you die.  This did not look optional but it does complicate things.

[Matilda]

For clarification - this is for my sister, not my spouse.  My sister was not married.  She had hired a nanny for her daughter.  There is a schedule H in the 2022 return.  And will be another one in the one month 2023 return.  It does seem complicated.

[hbl3973]

Matilda,

OK, for your sister, you will sign as Personal Representative.  Let's go back to what the IRS 1040 instructions tell us (https://www.irs.gov/pub/irs-pdf/i1040gi.pdf):

"If a taxpayer died before filing a return for 2022, the taxpayer's spouse or personal representative may have to file and sign a return for that taxpayer. A personal representative can be an executor, administrator, or anyone who is in charge of the deceased taxpayer's property. If the deceased taxpayer didn't have to file a return but had tax withheld, a return must be filed to get a refund. The person who files the return must enter “Deceased,” the deceased taxpayer's name, and the date of death across the top of the return. If this information isn't provided, it may delay the processing of the return."

The instructions later refer you to Tax Topic 356 (https://www.irs.gov/taxtopics/tc356) which further confirms and enlarges.  As you are planning have any refund applied to the 2023 taxes, there would be no need for form 1310.

Lastly, do download a copy of IRS Publication 559 (https://www.irs.gov/pub/irs-pdf/p559.pdf) which I found extremely useful after my mother died without a will and I was in charge of handling her affairs.

[hbl3973]

Matilda,

Good, you did discover what the IRS 1040 instructions said to do about DECEASED on the front page.  You should still be able to have the refund applied to 2023, though, rather than receiving it yourself.  Dig around a bit and see if you can force it.  It is eminently doable when simply filling out a paper 1040.  Also, did TurboTax explicitly tell you that you have to paper file?  If you aren't receiving the refund, then you should be able to. Paper filing is only needed for Form 1310.

In the interim, I'll fire up my TurboTax and try to reproduce your situation.

[hbl3973]

Matilda,

I tested in TurboTax (Premier Desktop version) and after applying the full refund to next year's taxes, I continued and got a screen that reads:

Who is the In Care Of Representative?

Even through you don't need to file Form 1310, Statement of Person Claiming a Refund Due a Deceased Taxpayer, you must designate a person to represent the taxpayer if you will file this return electronically.

In Care of Representative

(Enter Full Name)                ______________________________

[Matilda]

I was able to select to apply refund  to 2023 in 'forms' so I am good.    I can now E-File. 

Thank You for your help.

I did put in representative name as well.

[hbl3973]

Excellent.  Happy to have been of some assistance.  And, of course, sorry for your loss.