The IRS does not close an account because someone has died. It waits. A few months after the funeral, when the flowers are gone and the casseroles have stopped, the calendar quietly turns over and a tax year that belonged to your mother is still open. Someone has to finish it. Most families only learn that when a notice arrives addressed to a person who can no longer open the mail.

This is one of the least discussed jobs in settling an estate, and it is rarely as frightening as it sounds. But it has rules that are easy to miss when you are grieving and handling forty other things.

One person, two tax returns

The surprise for most people is that death splits a taxpayer's financial life into two separate tax entities.

The first is the person. Their income from January 1 through the date of death is reported on a final Form 1040, the ordinary individual return. It is due on the usual date, generally April 15 of the year after death, even though the filer is gone. If your father died in March 2026, that return covers January through March 2026 and is due in spring 2027.

The second is the estate. Once someone dies, their property becomes a separate legal and tax entity. Income the estate earns afterward, such as interest on a bank account, dividends, or rent from a house that is still being held, is the estate's income, not the person's. If the estate's gross income for a year reaches $600 or more, the personal representative must file Form 1041, the income tax return for estates and trusts.

The estate also needs its own taxpayer number, an EIN. Using the deceased person's Social Security number for post-death income is a common and avoidable mistake.

This is separate from the federal estate tax, which most families never owe. This article is about plain income tax, which nearly every family does have to deal with.

Who actually files it

The obligation falls on the personal representative: the executor named in the will, or an administrator appointed by the court when there is no will.

If there is a surviving spouse, the picture changes a little. A surviving spouse can generally file a joint return for the year of death, and often should, since joint rates and a larger standard deduction usually produce a better result. In that case the spouse signs, and the return is marked to show the other person has died.

If there is no appointed representative, the person in charge of the deceased's property may need to step in. The IRS has procedures for this, and you should confirm them for your situation rather than guess.

A few practical habits help. Write "Deceased," the person's name, and the date of death at the top of the return. If you are the court-appointed representative, attach a copy of the court certificate showing your appointment. If you are the representative and a refund is due, you may be asked to include proof of your authority.

Form 56: telling the IRS you are in charge

Before much of this works smoothly, file Form 56, the Notice Concerning Fiduciary Relationship. It tells the IRS that you are now the person acting for the deceased or the estate. It routes notices to you instead of to a mailbox no one is checking, and it gives you standing to talk to the agency about the account.

It is a short form. Filing it early is one of the cheapest bits of protection in the whole process.

Refunds, and the form that unlocks them

Sometimes the final return shows a refund. That money belongs to the estate, not to whichever relative happens to open the envelope.

If you are the surviving spouse filing jointly, you generally claim it as part of the joint return. If you are a court-appointed representative filing an original return, you attach the court certificate. If you are neither, for instance a family member handling things informally, you may need Form 1310 to claim a refund on behalf of the deceased. The form exists so a check cannot be sent to the wrong person.

No refund should be treated as spendable until you know whose money it is and whether the estate has debts that come first.

The hidden income that arrives after death

This is where the real confusion lives. Some money owed to a person is only paid after they die, and the tax rules treat it in a particular way.

The IRS calls it income in respect of a decedent. It is income the person had earned or was entitled to, but had not yet received or been taxed on. Common examples include a final paycheck, unpaid commissions, and distributions from a traditional IRA or 401(k).

Whoever receives that money reports it as their own income. It is not taxed on the final 1040 unless the person actually received it before death. And unlike a house or stock held in a taxable account, these items generally do not get a stepped-up basis at death. A child who inherits a traditional IRA is inheriting a pile of money that has never been taxed, along with the tax bill that comes with it.

This is why "my mother left me $200,000 in her IRA" and "my mother left me $200,000 in her savings account" are very different sentences on a tax return.

A deduction worth knowing about

Medical bills are often large in a person's final months. If the estate pays the deceased's medical expenses within one year after death, the representative can choose to treat them as if they were paid on the date the person was still alive, and deduct them on the final return. This requires attaching a statement, and the same expense cannot be used on both the final return and the estate's estate tax return. For families who spent a long illness paying out of pocket, it can matter.

Why the order of payment matters

Federal law puts debts owed to the United States ahead of many other claims against an insolvent estate. A representative who pays other creditors or distributes money to heirs while a tax bill is still outstanding can, in some cases, be held personally responsible for the unpaid amount. That is another reason to settle the tax picture before handing out inheritances, not after.

Your next moves

  • Request the paperwork trail now. Collect the last two or three years of returns, the most recent W-2s and 1099s, and any IRS letters. If you cannot find a prior return, you can ask the IRS for a transcript once you have filed Form 56.
  • Get an EIN for the estate. Apply through the IRS website once you are the appointed representative, so interest and dividends stop landing under the dead person's Social Security number.
  • File Form 56. Send it to the IRS to establish you as the fiduciary, so notices come to you.
  • Mark your calendar. Write down the final 1040 due date, and note that the estate's first 1041 follows the tax year the estate chooses, which can be a calendar year or a fiscal year ending within twelve months.
  • Find out who gets the IRA-type money. List every retirement account and unpaid wage or commission item, and note who is named as beneficiary, so no one is surprised by a tax bill the following April.
  • Book an hour with a CPA or enrolled agent. For a single death, a one-time consultation often costs less than a single mistake does.

The part no one tells you

None of this is hard because the math is hard. It is hard because the information is scattered: a brokerage statement in one place, a retirement account in another, a letter from a former employer in a drawer no one has opened. The tax return is only as accurate as the picture you can assemble.

That is the reason we built Heirloom. It gives a family one organized map of accounts, documents, and contacts, so the person who ends up with the final return is not hunting for a 1099 while also writing an obituary. If you would like to see what that looks like before you need it, you can look around at heirloom.lumenlabs.works.