Final Tax Return Required After Death for Income and Retirement Accounts

After a person dies, the requirement to file a federal income tax return depends on whether the decedent would have needed to file if still living. A final Form 1040 covers income received or constructively received before death and deductions properly attributable to the decedent.

Income in respect of a decedent, such as unpaid wages, retirement distributions, and accrued interest, is taxed to the estate or heirs rather than on the final return. Traditional retirement accounts are treated as IRD assets, and distributions to nonspouse beneficiaries who died in 2020 or later generally must be withdrawn within ten years.

Executors may also need to file Form 1041 for estate or trust income. Banks and other payers may continue issuing Forms 1099 under the decedent’s Social Security number until accounts are retitled in the estate’s name with a new EIN. A surviving spouse can file a joint return for the year of death and sometimes the prior year, but doing so creates joint and several liability for any unpaid taxes.

Executors must check for prior unfiled returns, audits, liens, and balances. 9 million delinquent accounts totaling $208 billion as of the end of 2024. An executor who distributes assets before paying federal tax claims can be held personally liable.

If the final return shows a refund, surviving spouses filing jointly generally do not need Form 1310, but other claimants may. Processing of deceased-taxpayer refunds has been identified by the Taxpayer Advocate Service as a recurring delay.