A Tax Preparer Could Help When Dealing With A Deceased Person's Filing Requirements

Posted on: 19 February 2020

Filing a tax return can be complicated. Even when all the information about income, interest, deductions, and more sit neatly in a folder, difficulties may arise. Stress and anxiety, in particular, could make completing even a 1040-EZ problematic. And what is more stressful than dealing with the aftermath of a loved one's death? Sadly, death does not eliminate the necessity to file federal or state taxes. If the recently departed earned any income during the last year of his/her life, then filing returns becomes a duty of the estate or surviving family members. Rather than deal with the troubles of filing a return while distressed, perhaps it is best to call on a professional tax preparer.

Anxiety, Stress, Mistakes, and More Troubles

The normal stress and distress brought about when a loved one dies could become worse when he/she passes right before tax time. While it may seem coldhearted, the tax agencies do require those returns, and late fees, penalties, interest, and more will pile up if the return doesn't arrive on time. Rushing to complete the return, however, probably isn't the best plan. An anxious mind makes mistakes. Sloppily completing a return in handwritten pen-and-ink combined with math errors represents a potential disaster. An audit may loom.

Accidental Underreporting

A lack of thoroughness could lead to income being omitted from the forms, too. When going through the deceased's drawers and files, you may believe the 1099s and other documents found to reflect the only ones received. That might not be the case. Maybe a 1099-INT for $3,000 in bond interest income went missing. Perhaps it didn't even arrive in the mail yet. Regardless, filing the return with missing information could lead to an underreported income audit. Hopefully, you would catch the error before such a calamity occurred and filed an amended return. However, filing an amended return requires more work and cost.

The executor of the estate might write the various banks, employers, and financial institutions for copies of 1009s, W-2s, and more. Such information, when received, could then go to a professional tax preparer.

The Tax Preparer's Assistance

A tax preparation service will be able to complete all necessary work to file the returns without the emotional attachment that may lead to mistakes. A preparer could even file necessary extensions and even request penalty reductions based on the circumstances. For these reasons and more, distraught family members may wish to contact a preparer rather than completing tax forms on their own.