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A Taxing Situation - What To Do About A Loved One's Taxes After Death

Just like death, paying taxes are just another fact of life. In fact, most taxing entities require their payment or paperwork regardless of a person's death and they don't really care how it is done, as long as it is. When it comes to the Internal Revenue Service, they require the federal income tax of your deceased love one still be filed by the yearly deadline of April 15th. If you are still dealing with going through their files and don't have all the information necessary to complete the tax filing, you can request an extension.

The Internal Revenue Service website even has information you can download when you are the executor of an estate or at least a surviving relative of the deceased. Calling or stopping by a local Internal Revenue Service office with your questions will help lead you in the right direction.

Property taxes are another sure thing in life and are also due just as if your loved one were still alive. If the property is not sold by the time the taxes are due, the estate has to pay them. However, if the property is sold before the next tax due date, the new owners are responsible for them. Of course, each state may have slightly different rules so be sure to check with your state's treasury office.

You will have to check the laws in your deceased loved one's state as each state in the country may have slightly different rules about state estate taxes. There are thresholds for each state which dictate the percentage you may be taxed on the estate. Some people may not have to pay estate state taxes if the total value is less than the threshold amount dictated by the state.

Federal estate taxes may be assessed on your deceased loved one's property and will take into account several things:

1. The property listed with the deceased at the time of their death such as their home, a cabin in the woods or even if they owned rental properties.
2. Proceeds from life insurance
3. At least half of the community properties that the deceased share with a spouse or significant other.

Other things are taken into consideration when it comes to Federal Estate Taxes. It is up to you as the responsible party for your deceased loved one's estate. From fulfilling their wishes for their funeral and personal bequests to towing the line legally in regards to taxes, you will have your hands full for a while. Likely, it will be a year or two before everything from bills to stray insurance payments to muddling through paperwork is taken care of totally.

When possible, talk with your loved ones before they pass on. Tell them that you need a clear and concise plan in order to best take care of their wishes and estate in the event of their death. You may even want to sit down and have a meeting with them to talk about the issue of death and how they want you to handle their affairs. Knowing where they file the paperwork to the rules of their state can greatly help you when the time comes.