My mother died in November 2011. My father's been dead for 13 years. April 15 is coming and I have no idea what to do (or if I should) file federal and/or state income taxes for my mother. She lived in a NH for all of 2011 until she died and her money was spent down on the monthly rent, but there was some money left when she died, which went to me, POD. There was no real estate.
My husband has always done our taxes and, for the past 5 years, my mother's. He's getting nervous about doing hers this year but we don't want to go to H&R Block or anything. I'm hoping it will be fairly simple. Do we need a special form? Her money did generate some interest, so if she actually owes taxes, do we have to pay it?
Any advice or information is very much appreciated. We're in NJ.
Any good CPA is a better risk to use for preparing your return! They have professional standards and licensing to maintain. Most CPA's are qualified to prepare most individual 1040s. They tend to understand the language of the IRS, too. H&R Block makes plenty of mistakes...don't assume.
This thread is several years old. You might get more responses if you posted your question as a new thread.
Who was the executor of the estate? They should have seen that the taxes were filed for the year that your mother died. Ask the executor to make sure the taxes were filed.
As Executrix, or Personal Representative as it's now known in some states, you would hire a real estate or elder law attorney to prepare and record the deed to transfer title from your father to (a) the 3 daughters or (b) your 2 sisters.
Expenses and income for the year in which this occurs would be prorated based on the date either of the transfer deed or the recording of it. I'm not sure of this, i.e., which date would govern. You'd have to ask the attorney who prepares the deed.
However, if your sisters want to retain the house and not sell it, the issue arises of what happens to your 1/3 interest. This is where it can get tricky:
1. If you want to remain a 1/3 interest holder, then the proceeds from renting all the units should be split between the 3 of you. And you each report that 1/3 income on your individual tax returns, as well as take 1/3 of the expenses.
And don't forget that it's rental income and needs to be treated as such on your income tax returns.
However, I'm assuming that the sisters aren't paying rent to themselves and you as owners. So some equitable arrangement needs to be reached to compensate you for your 1/3 share.
2. If you don't want to remain a fee holder, you should be paid your 1/3 share, and title transferred to the 2 sisters jointly. Then they only (not you) report the income from the rental units as well as the expenses, on their tax returns.
Whether there are 2 or 3 feeholders, each would contribute a proportionate share of the expenses of the house and pay an equally proportionate share of the taxes (and other maintenance such as Rental insurance coverage for the tenants, upkeep, property taxes, etc.). (And coincidentally, liability would be split among the owners, whether 2 or 3 sisters.)
But if the 4 family house was your father's only asset, once title is transferred to the 2 sisters or you and them, there shouldn't be a need for tax filings on his behalf after the year in which the transfer took place. There's no reason to keep his estate open once disposition of the house is made, unless there are other assets of which to dispose.
Who actually owns the house? Is the house paid for? Who pays the property tax and home owners insurance?
Two sisters are keeping up a house big enough for four families? That is a huge house! Isn't that too big for them?
For the last month of 2013, you should have had to pay taxes on the accounts you held jointly with your dad. That is true of 2014 and 2015 as well?
One copy is sent to your deceased dad's old address and the other to the IRS. Those who send out the 1099s need to know the correct address to send them to, if that has not already been dealt with.
My memory tells me that you have to send a death certificate along with the return.
Even without the 1099 and guessing at it, you can't file because the forms have not even been made yet.
Why the hurry for the tax refund?
There's a lot of anxiety here over something that will not move any faster than it does on each year's cycle.
Are you the executor? If you are not, then who is?
Social Security has been informed of his death?
Was his money moved into an the estate of _____________ account?
Is there a will?
If someone dies in a year, they are considered as having been alive the whole year. They get the complete standard deduction (or itemized, if that is the case). SS will probably not be taxed unless retirement income was high. From what you write, it sounds like it wasn't.
You won't be able to file online. You will have to have the authority to file the tax return and to sign as a personal representative. If you are the executor of the will, there is no problem. IRS has instructions online about special things to do when the taxpayer is deceased. It is pretty simple.
All of this takes time. I'm dealing with my moms probate & her state allows 4 years for it to close.
Cashing in the deceased IRS refund to you personally has all sorts of issues.
You will file return just as if Dad was still here - just put "deceased" at top of front page on 1040 Form.
I'm still here - thanks for your answer. My brother and I were co-executors. Her bank account was not a joint one, it was in her name only, with Payable upon Death to myself and my brother. It earned some interest in 2011, so I figured she would owe something. I guess that'll have to come out of the inheritance. My husband will be calling the IRS - thanks to everyone who suggested that. The reason he (and I) don't want to go to H&R Block is simple: they charge money. We may end up having to spend some on a CPA anyway if this all gets too complicated, but her estate was so simple, I'm hoping we'll be able to figure it all out.