Do You Have to File Taxes for a Deceased Person?

If you are handling the affairs of someone who died, filing taxes for a deceased person usually means at least one return and sometimes three. A final Form 1040 is required for the year of death whenever the person’s income met the normal filing threshold. The estate itself becomes a separate taxpayer the moment the person dies and owes income tax on anything earned afterward, reported on Form 1041 once income reaches $600. And a federal estate tax return, Form 706, is only required when the estate exceeds $15 million in 2026. Each return has its own deadline, and a few smaller filings sit around them.

The Final Form 1040

The deceased person’s final individual return covers January 1 through the date of death and reports only income actually received or constructively earned before death. A paycheck deposited the day after death does not belong here; it belongs on the estate’s return or on the beneficiary’s return.¹

Whether the return is legally required tracks the same gross income thresholds that apply to living taxpayers. For 2026, a single person under 65 must file if gross income reaches $16,100; a married couple filing jointly must file at $32,200 when both spouses are under 65.² The personal representative decides whether the partial-year income cleared that line.³

Even for someone who died on January 2, the return still gets the full standard deduction for the filing status. Credits the person would have qualified for while alive, including the Earned Income Credit and Child Tax Credit, remain available if the eligibility rules were met. The return is due April 15 of the following year, with a six-month extension available on Form 4868.⁴

Filing Jointly With a Surviving Spouse

A surviving spouse can file a joint return with the deceased for the year of death. That unlocks the larger married-filing-jointly standard deduction ($32,200 for 2026) and wider brackets, which typically produces a lower combined tax bill. The catch is that the surviving spouse takes on full liability for any tax owed on that return. If the couple had been filing separately or the deceased had questionable tax positions, think through the shared liability before choosing to file jointly.

Claiming a Refund

If the final return produces a refund, who can claim it depends on the circumstances. A surviving spouse filing jointly, or a court-appointed personal representative filing the original return, needs no extra paperwork. Everyone else, including family members handling a small estate outside probate, must attach Form 1310 to the return.⁵ Skipping it will stall the refund.

Medical Bills Paid After Death

Unpaid medical expenses the deceased incurred create a useful election. If the estate pays those bills within one year of the date of death, the personal representative can treat them as if the deceased paid them while alive, deducting them on the final Form 1040 (subject to the 7.5% of adjusted gross income floor) instead of on the estate tax return. To make the election, attach a statement to the income tax return waiving the right to deduct those same expenses on Form 706.⁶ You cannot deduct the same expense on both returns, and any amount below the 7.5% floor cannot be shifted back to the estate tax return.

The Estate’s Income Tax Return, Form 1041

The moment someone dies, their estate becomes its own taxpayer. Interest on bank accounts, rent from property, dividends on investments, anything earned after the date of death belongs to the estate (or to a trust, if one exists) and gets reported on Form 1041.¹

Form 1041 is required if the estate generates $600 or more in gross income during the tax year, or if any beneficiary is a nonresident alien.¹ Below $600, no Form 1041 is needed and the estate does not even need its own EIN.⁷

Income in Respect of a Decedent

Some income straddles the line between the final 1040 and the estate. Income in Respect of a Decedent (IRD) covers amounts the person had earned or was entitled to receive but had not been paid before death: a final paycheck issued after the death date, retirement account distributions, accrued but unpaid interest. IRD keeps its original character (ordinary income, capital gain) and is taxed to whoever receives it, whether that is the estate or a beneficiary directly.

Why Distributions Matter

The estate can deduct income it distributes to beneficiaries, up to a ceiling called Distributable Net Income (DNI). This prevents double taxation: the estate deducts what it passes out, and beneficiaries report what they receive on their own returns through Schedule K-1.¹

Anything the estate keeps is taxed at fiduciary rates, and those brackets are compressed. For 2026, an estate hits the top federal rate of 37% on taxable income above just $16,000.⁸ An individual taxpayer would need several hundred thousand dollars of taxable income to reach that same bracket. This creates a strong incentive for the personal representative to distribute income to beneficiaries rather than let it accumulate inside the estate.

The estate can elect a fiscal tax year ending on the last day of any month, so long as the first period does not exceed 12 months from the date of death; trusts, with limited exceptions, must use a calendar year. Form 1041 is due April 15 for calendar-year filers, or the 15th day of the fourth month after the close of a fiscal year.¹

The Federal Estate Tax, Form 706

The estate tax is a transfer tax on the value of everything the deceased owned. It applies only to large estates. For someone dying in 2026, the basic exclusion is $15 million per person, and Form 706 is required only when the gross estate plus lifetime taxable gifts exceeds that amount.⁹ The $15 million figure comes from the One, Big, Beautiful Bill Act (Public Law 119-21), signed on July 4, 2025, which replaced the expiring Tax Cuts and Jobs Act provisions with a permanent higher exemption that has no sunset date.¹⁰ Most estates fall well below this line and owe nothing.

The gross estate is broad. It includes real estate, bank accounts, investments, business interests, and life insurance proceeds where the deceased held ownership rights. Assets that skip probate, such as property in a revocable living trust or jointly held real estate with right of survivorship, still count. The taxable estate is what remains after debts, funeral costs, administration expenses, the unlimited marital deduction for transfers to a U.S.-citizen spouse, and the unlimited charitable deduction. The rate on anything above the exemption is a flat 40%.

Form 706 is due nine months after the date of death. Form 4768 buys an automatic six-month extension to file, but not to pay. Estimated tax must still be paid by the nine-month deadline to avoid penalties and interest.¹¹

Portability: A Reason to File Even When You Don’t Have To

Even when a married person’s estate is far below $15 million, filing Form 706 can pay off. Portability lets the surviving spouse inherit any portion of the deceased spouse’s unused exclusion. If the first spouse used only $3 million of their $15 million exemption during life, the surviving spouse can add the remaining $12 million to their own, effectively shielding $27 million at the second death. The election is made on Form 706 and is irrevocable once filed.

The standard deadline for the portability election is the Form 706 due date (nine months after death, plus extensions). Estates that were not otherwise required to file Form 706 have a safety net: under Revenue Procedure 2022-32, the executor can file a late portability-only Form 706 up to five years after the date of death. The return must state at the top that it is filed pursuant to that revenue procedure.¹² Relief is only available to estates that were not required to file under the normal rules. Estates that were required to file and simply missed the deadline do not qualify.

Step-Up in Basis and Form 8971

One of the biggest tax consequences of death has nothing to do with a return for the deceased. Under federal law, inherited property receives a new tax basis equal to its fair market value on the date of death.¹³ If the deceased bought stock for $50,000 and it was worth $200,000 at death, the beneficiary’s basis is $200,000. Selling it the next day for $200,000 produces zero capital gain. The $150,000 in lifetime appreciation is never taxed to anyone. If the estate qualifies for and elects the alternate valuation date under the estate tax rules, assets can instead be valued six months after death.

When a Form 706 is filed, the executor must also file Form 8971 and give each beneficiary a Schedule A reporting the value of the property they received. Beneficiaries cannot use a basis higher than the value reported, a rule known as the consistent basis requirement. Form 8971 is due 30 days after the Form 706 is filed or 30 days after the Form 706 filing deadline, whichever comes first.¹⁴ Missing it can create real problems for beneficiaries who later sell inherited assets.

State Estate and Inheritance Taxes

Federal filings are only part of the picture. Roughly a dozen states and the District of Columbia impose their own estate tax, and a handful of states levy an inheritance tax on beneficiaries. State estate tax exemptions are often far below the federal threshold, with some starting as low as $2 million, and a few states set their top rates above 15%. Inheritance tax rates and exemptions vary by the beneficiary’s relationship to the deceased, with surviving spouses and direct descendants typically owing nothing or qualifying for generous exemptions while distant relatives and unrelated beneficiaries face steeper rates. Check your state’s tax authority early, because state deadlines do not always match the federal schedule.

Penalties and Interest for Missing a Deadline

The failure-to-file penalty is 5% of the unpaid tax for each month or partial month a return is late, capping at 25%.¹⁵ The failure-to-pay penalty runs separately at 0.5% per month, also capping at 25%.¹⁶ When both apply in the same month, the failure-to-file penalty drops by the failure-to-pay amount, so the combined bite is not a full 5.5% per month. It still adds up fast on a large estate tax bill.

Interest compounds daily on top of penalties. For the first quarter of 2026, the IRS underpayment interest rate is 7% per year, adjusted quarterly.¹⁷ On a $1 million estate tax liability, a year of penalties and interest could easily top $300,000. An extension of time to file blocks the failure-to-file penalty but not the failure-to-pay penalty or interest. If you cannot pay in full, file on time anyway and pay as much as you can.

Administrative Steps Before You File

A few procedural tasks come before the returns.

Get an EIN for the Estate

If the estate will file Form 1041, it needs its own Employer Identification Number. Apply using Form SS-4 or the IRS online EIN application.¹⁸ The EIN replaces the deceased person’s Social Security number for all post-death income reporting. If the estate runs a business the deceased owned, that business needs a separate EIN.⁷

Tell the IRS You’re the Fiduciary

Form 56 notifies the IRS that you are the fiduciary for the deceased person’s tax matters, so notices come to you rather than the deceased person’s last address.¹⁹ Sign all returns in your fiduciary capacity, with your title (such as “Executor” or “Administrator”) on the signature line.

Request Discharge From Personal Liability

Personal representatives can be held personally liable for a deceased person’s unpaid taxes. To close out that risk, file Form 5495 requesting a discharge under IRC sections 2204 and 6905. For income and gift taxes, file after submitting the relevant returns. For estate taxes, attach Form 5495 to Form 706 or file it any time within three years afterward.²⁰ The IRS then has nine months from receiving the request to assess additional tax. After that window closes, or after you pay any amount the IRS determines is owed, the discharge takes effect. Most personal representatives never hear about this step until it is too late to matter. File it.

Key Deadlines at a Glance

Final Form 1040: April 15 of the year after death (six-month extension available via Form 4868)
Form 1041: April 15 for calendar-year estates, or the 15th of the fourth month after a fiscal year ends
Form 706: Nine months after the date of death (six-month extension to file via Form 4768, but payment is still due at nine months)
Late portability election: Up to five years after death for estates not otherwise required to file Form 706
Form 8971: 30 days after Form 706 is filed or due, whichever is earlier

1
Internal Revenue Service. Instructions for Form 1041 and Schedules A, B, G, J, and K-1 (2025)
2
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026, Including Amendments From the One, Big, Beautiful Bill
3
Internal Revenue Service. Publication 501 (2025), Dependents, Standard Deduction, and Filing Information – Section: Deceased Persons
4
Internal Revenue Service. About Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return
5
Internal Revenue Service. Form 1310, Statement of Person Claiming Refund Due a Deceased Taxpayer
6
Internal Revenue Service. Publication 559, Survivors, Executors, and Administrators
7
Internal Revenue Service. Responsibilities of an Estate Administrator
8
Internal Revenue Service. 2026 Form 1041-ES, Estimated Income Tax for Estates and Trusts
9
Internal Revenue Service. Estate Tax
10
Internal Revenue Service. What’s New – Estate and Gift Tax
11
Internal Revenue Service. About Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return
12
Internal Revenue Service. Revenue Procedure 2022-32
13
Office of the Law Revision Counsel. 26 U.S. Code 1014 – Basis of Property Acquired From a Decedent
14
Internal Revenue Service. Instructions for Form 8971 and Schedule A
15
Internal Revenue Service. Failure to File Penalty
16
Internal Revenue Service. Failure to Pay Penalty
17
Internal Revenue Service. Interest Rates Remain the Same for the First Quarter of 2026
18
Internal Revenue Service. Instructions for Form SS-4 (12/2025), Application for Employer Identification Number (EIN)
19
Internal Revenue Service. Instructions for Form 56 (12/2024)
20
Internal Revenue Service. Form 5495, Request for Discharge From Personal Liability Under Internal Revenue Code Section 2204 or 6905