A personal representative of an estate is an executor, administrator, or anyone who oversees the deceased person's (decedent's) property. An executor (or executrix if female) is usually named in a decedent's will to administer the estate, pay any outstanding debts of the estate, and distribute the estate's assets as the decedent has directed.
An administrator (or administratrix if female) is usually appointed by the court if there is no will, if no executor was named in the will, or if the named executor can't or won't serve.
For estate tax purposes, if there is no executor or administrator appointed, qualified, and acting within the United States, the term "executor" includes anyone in actual or constructive possession of any property of the decedent. It includes, among others:
• the decedent's agents and representatives;
• safe-deposit companies, warehouse companies, and other custodians of property in the United States;
• brokers holding securities of the decedent as collateral; and
• the debtors of the decedent who are in the United States.
Duties
An executor and an administrator generally perform the same duties and have the same responsibilities. These duties and responsibilities are mostly defined by state law in a state's statutes—often in the estates code or probate code—and may vary from state to state.
The primary duties of a personal representative are to collect all the decedent's assets, pay the decedent's creditors, and distribute the remaining assets to the heirs or other beneficiaries.
The personal representative must also perform the following duties:
• Apply for an employer identification number (EIN) for the estate.
• File all tax returns, including income, estate, and gift tax returns, when due.
• Pay the tax determined up to the date of discharge from duties.
A personal representative may have other duties related to federal tax matters (if, for example, any beneficiary is a nonresident alien, and tax must be withheld)—and duties under state law—and may want to consult with a tax advisor and a probate lawyer.
Penalty
There is a penalty for failure to file a tax return when due unless the failure is due to reasonable cause. Reliance on an agent (attorney, accountant, etc.) isn't reasonable cause for late filing. It is the personal representative's duty to file the returns for the decedent and the estate when due.
Identification Number
One of the first things you should do as a personal representative for the decedent is apply for an EIN (employer identification number) for the estate. You should apply for this number as soon as possible because you need to enter it on returns, statements, and other documents you file concerning the estate. You must also give the identification number to payers of interest and dividends and other payers who must file a return concerning the estate.
You can get an EIN by applying online at irs.gov/ein. If you apply online, you will usually receive your EIN immediately upon completing the application. You can also apply using Form SS-4, Application for Employer Identification Number. If you apply by mail, it usually takes about 4 weeks to get your EIN.
Payers of interest and dividends report amounts on Forms 1099 using the identification number of the person to whom the account is payable. After a decedent's death, Forms 1099 must reflect the identification number (EIN, ITIN, or SSN) of the estate or beneficiary to whom the amounts are payable. As the personal representative handling the estate, you must furnish this identification number to the payer.
For example, if interest is payable to the estate, the estate's EIN must be provided to the payer and used to report the interest on Form 1099-INT. If the interest is payable to a surviving joint owner, the survivor's identification number, such as an SSN or ITIN, must be provided to the payer and used to report the interest.
If the estate or a survivor may receive interest or dividends after you inform the payer of the decedent's death, the payer should give you (or the survivor) a Form W-9, Request for Taxpayer Identification Number and Certification (or a similar substitute form). Complete this form to inform the payer of the estate's (or if completed by the survivor, the survivor's) identification number and return it to the payer.
Don't use the deceased individual's identifying number to file an individual income tax return after the decedent's final tax return. Also, don't use the decedent's identifying number to make estimated tax payments for a tax year after the year of death.
Penalty
If you don't include the EIN or the taxpayer identification number of another person where it is required on a return, statement, or other document, you are liable for a penalty for each failure, unless you can show reasonable cause. You also are liable for a penalty if you don't give the taxpayer identification number of another person when required on a return, statement, or other document.
Notice of Fiduciary Relationship
A fiduciary is a person acting on behalf of another in a position of trust and confidence. It generally includes a guardian, trustee, executor, administrator, receiver, or conservator. A personal representative for a decedent's estate is also a fiduciary and owes the highest duties of care (in the performance of duties) and loyalty (no conflicts of interest) to the beneficiaries the estate.
Form 56
If you are appointed to act in a fiduciary capacity for another, you must file a written notice with the IRS stating this. Form 56, Notice Concerning Fiduciary Relationship, is used for this purpose.
File Form 56 as soon as all the necessary information (including the EIN) is available. It notifies the IRS that you, as the fiduciary, are assuming the powers, rights, duties, and privileges of the decedent. The notice remains in effect until you notify the IRS (by filing another Form 56) that your fiduciary relationship with the estate has terminated.
Termination of Fiduciary Relationship
Form 56 should also be filed to notify the IRS if your fiduciary relationship is terminated or when a successor fiduciary is appointed if the estate hasn't been terminated. See Form 56 and its instructions for more information.
At the time of termination of the fiduciary relationship, you may want to file Form 4810, Request for Prompt Assessment Under Internal Revenue Code Section 6501(d), and Form 5495, Request for Discharge From Personal Liability Under Internal Revenue Code Section 2204 or 6905, to wind up your duties as fiduciary.
Request for Prompt Assessment (Charge) of Tax
The IRS ordinarily has 3 years from the date an income tax return is filed, or its due date, whichever is later, to charge any additional tax due. But as a personal representative, you may request a prompt assessment of tax after the return has been filed. This reduces the time for making the assessment to 18 months from the date the written request for prompt assessment was received.
This request can be made for any tax return (except the estate tax return) of the decedent or the decedent's estate. This may permit a quicker settlement of the tax liability of the estate and an earlier final distribution of the assets to the beneficiaries.
Form 4810 can be used for making this request. It must be filed separately from any other document.
As the personal representative for the decedent's estate, you are responsible for any additional taxes that may be due. You can request prompt assessment of any of the decedent's taxes (other than federal estate taxes) for any years for which the statutory period for assessment is open. This applies even though the returns were filed before the decedent's death.
Failure to Report Income
If you or the decedent failed to report substantial amounts of gross income (more than 25% of the gross income reported on the return) or filed a false or fraudulent return, your request for prompt assessment won't shorten the period during which the IRS may assess the additional tax. But such a request may relieve you of personal liability for the tax if you didn't have knowledge of the unpaid tax.
Request for Discharge from Personal Liability for Tax
An executor can make a request for discharge from personal liability for a decedent's income, gift, and estate taxes. The request must be made after the returns for those taxes are filed. To make the request, file Form 5495. For this purpose, an executor is an executor or administrator that is appointed, qualified, and acting within the United States.
Within 9 months after receipt of the request, the IRS will notify the executor of the amount of taxes due. If this amount is paid, the executor will be discharged from personal liability for any future deficiencies. If the IRS hasn't notified the executor, the executor will be discharged from personal liability at the end of the 9-month period.
Even if the executor is discharged from personal liability, the IRS will still be able to assess tax deficiencies against the executor to the extent the executor still has any of the decedent's property.
Insolvent Estate
If a decedent's estate is insufficient to pay all the decedent's debts, the debts due to the United States generally must be paid first. Both the decedent's federal income tax liabilities at the time of death and the estate's income tax liability are debts due to the United States.
The personal representative of an insolvent estate is personally responsible for any tax liability of the decedent or of the estate if the personal representative had notice of the tax obligations or failed to exercise due care in determining if such obligations existed before distribution of the estate's assets and before being discharged from duties.
The extent of such personal responsibility is the amount of any other payments made before paying the debts due to the United States, except where such other debt paid has priority over the debts due to the United States. Income tax liabilities need not be formally assessed for the personal representative to be liable if the personal representative was aware or should have been aware of their existence.
Fees Received by Personal Representatives
All personal representatives must include fees paid to them from an estate in their gross income. If you aren't in the trade or business of being an executor (for instance, you are the executor of a friend's or relative's estate), these fees may be reported on your Schedule 1 (Form 1040), line 8. If you are in the trade or business of being an executor, fees received from the estate as self-employment income may be reported on Schedule C, Profit or Loss From Business, of your Form 1040.
If the estate operates a trade or business and you, as executor, actively participate in the trade or business while fulfilling your duties, any fees you receive related to the operation of the trade or business must be reported as self-employment income on Schedule C of your Form 1040.
These laws, requirements, and forms may change at any time, so be sure to consult with your tax advisor before filing any tax return.
Final Income Tax Return for Decedent—Form 1040 or 1040-SR
The personal representative must file the final income tax return (Form 1040 or 1040-SR) of the decedent for the year of death—and for preceding years for which returns have not been filed. Under some circumstances a surviving spouse may have to file the returns for the decedent.
Return for Preceding Year
If an individual died after the close of the tax year but before the return for that year was filed, the return for the year just closed won't be the final return. The return for that year will be a regular return and the personal representative must file it.
Name, Address, and Signature
Write the word "DECEASED," the decedent's name, and the date of death across the top of the tax return. If filing a joint return, write the name and address of the decedent and the surviving spouse in the name and address fields. If a joint return isn't being filed, write the decedent's name in the name field and the personal representative's name and address in the address field.
Third-Party Designee
You can check the "Yes" box in the Third-Party Designee area on Form 1040 or 1040-SR to authorize the IRS to discuss the return with a friend, family member, or any other person you choose. This allows the IRS to call the person you identified as the designee to answer any questions that may arise during the processing of the return. It also allows the designee to perform certain actions. See the Instructions for Form 1040 and 1040-SR for details.
Signature
If a personal representative has been appointed, that person must sign the return. If it is a joint return, the surviving spouse must also sign it. If no personal representative has been appointed, the surviving spouse (on a joint return) signs the return and writes in the signature area "Filing as surviving spouse." If no personal representative has been appointed and if there is no surviving spouse, the person in charge of the decedent's assets or property must file and sign the return as "personal representative."
Paid Preparer
If you pay someone to prepare, assist in preparing, or review the tax return, that person must sign the return and fill in the other blanks in the Paid Preparer Use Only area of the return. See the Form 1040 and 1040-SR instructions for details.
When and Where to File
The final income tax return is due at the same time the decedent's return would have been due if the decedent were still living. A final return for a decedent who was a calendar year taxpayer is generally due on April 15 following the year of death, regardless of when during that year death occurred. But when the due date falls on a Saturday, Sunday, or legal holiday, the return is filed timely if filed by the next business day.
A personal representative generally must file the final income tax return of the decedent with the IRS Center for the place where the personal representative lives. A tax return for a decedent can be electronically filed. A personal representative may also obtain an income tax filing extension on behalf of a decedent.
Filing Requirements
The gross income, age, and filing status of a decedent generally determine whether a return must be filed. Gross income is all income received by an individual from any source in the form of money, goods, property, and services that isn't tax-exempt. It includes gross receipts from self-employment, but if the business involves manufacturing, merchandising, or mining, subtract any cost of goods sold.
In general, filing status depends on whether the decedent was considered single or married at the time of death. See the income tax return instructions or IRS Publication 501, Dependents, Standard Deduction, and Filing Information.
Refund
A return must be filed to obtain a refund if tax was withheld from salaries, wages, pensions, or annuities, or if estimated tax was paid, even if a return isn't otherwise required to be filed. And the decedent may be entitled to other credits that result in a refund.
Form 1310, Statement of Person Claiming Refund Due a Deceased Taxpayer
Form 1310 doesn't have to be filed if you are claiming a refund and either of the following applies to you:
• You are a surviving spouse filing an original or amended joint return with the decedent.
• You are a court-appointed or certified personal representative filing the decedent’s original return and a copy of the court certificate showing your appointment is attached to the return.
If the personal representative is filing a claim for refund on Form 1040-X, Amended U.S. Individual Income Tax Return, or Form 843, Claim for Refund and Request for Abatement, and the court certificate has already been filed with the IRS, attach Form 1310 and write "Certificate Previously Filed" at the bottom of the form.
If you are a surviving spouse and you receive a tax refund check in both your name and your deceased spouse's name, you can have the check reissued in your name alone. Return the joint-name check marked "VOID" along with Form 1310 to your local IRS office or the service center where you mailed your return, along with a written request for reissuance of the refund check. A new check will be issued in your name and mailed to you.
Death Certificate
When filing the decedent's final income tax return, don't attach the death certificate or other proof of death to the final return. Instead, keep it for your records and provide it if requested.
In Texas, a personal representative of an estate, which can be an executor named in the will or an administrator appointed by the court if there is no will, is responsible for managing the decedent's estate. This includes collecting assets, paying debts, and distributing the remaining assets to beneficiaries. They must also apply for an Employer Identification Number (EIN) for the estate, file necessary tax returns, and pay any taxes due. The personal representative may be held personally liable for failure to file tax returns or pay taxes when due. They must also file Form 56 with the IRS to notify of their fiduciary relationship and may use Form 4810 and Form 5495 to request prompt assessment of taxes and discharge from personal liability, respectively. Fees received for their services are considered taxable income. The final income tax return for the decedent must be filed, and if a refund is due, Form 1310 may be required unless the filer is a surviving spouse or court-appointed personal representative. It is advisable for personal representatives to consult with an attorney and tax advisor to ensure compliance with all legal and tax obligations.
