How is the Internal Revenue Service (IRS) involved?

For federal income tax purposes, death triggers two things. It ends the decedent's last tax year for purposes of filing a federal income tax return, and it establishes a new tax entity, the "estate."

The personal representative may be required to file the following returns, depending on income of the decedent, income of the estate and size of the estate:
  • Final Form 1040 income tax return, reporting income for the decedent's final tax year.
  • One or more Form 1041 income tax returns for the estate, reporting income for the estate.
  • Form 709 gift tax return(s), reporting certain gifts made by the decedent prior to death.
  • Form 706 estate tax return, reporting the gross estate and deductions, depending upon the value of the gross estate.
The personal representative may be required to file other returns. Additionally, the personal representative has the responsibility to deal with issues arising from tax years prior to the decedent's death (including tax returns that were filed by the decedent or that should have been filed).

The personal representative has the responsibility to pay amounts due to the IRS from the decedent and the estate and may be personally liable for those taxes. If a federal estate tax return is required to be filed, an estate tax closing letter is necessary to clear title to Florida real property, and in some instances in order to close the probate administration with the court.
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