If a Loved One Died in 2020, What Does it Mean For Their Tax Return?

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From lockdown to job loss, 2020 was a difficult year for almost everybody. Needless to say, it was especially traumatic for those who lost loved ones.

Unfortunately, the pain isn’t about to end for the bereaved now that a new year has arrived. In 2021, people who are still grieving must somehow cope with the burden of completing tax returns. Follow these steps to make the process as low-stress as possible:

Notifying Employers And Other Income Providers of the Taxpayer’s Death

Prior to completing tax returns, responsible parties should notify employers and financial institutions of the individual’s death. Early notification will ensure that all those who have previously granted the decedent income will report properly. Changes in reporting could impact income earned by the estate or provided to heirs.

How to File Tax Returns on Behalf of a Decedent

After a taxpayer dies, a spouse or representative may be called upon to complete the decedent’s final federal tax return. Basic information about the taxpayer’s death must be included. Depending on when the person died and whether this was followed by remarriage, it may be possible to file jointly and be referred to as the “surviving spouse” when filing.

Claiming Refunds After a Loved One Dies

One small source of relief: claiming your loved one’s refund should be relatively straightforward. As a surviving spouse, you’ll simply need to file the amended tax return. If you’ve been appointed as a representative, you’ll also be required to submit verification of this status.

As you deal with the grief of losing a loved one, you can take solace in knowing that support is available for your most stressful tax concerns. You’ll find compassionate service with the Highland Tax Group, so don’t hesitate to reach out for assistance.