Month: September 2023

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Filing Tax Returns for the Deceased

By D.J. Wilson

Responsibilities exist

Losing a spouse or other family member or someone we are close to is never easy. Not only is the emotional aspect weighty, but there are responsibilities that come along with managing the decedent’s affairs. Organization and follow through are key elements when filing tax returns for the deceased. Together, they can help the process go smoothly.

Important to know

For those with taxable income prior to death, a final tax return must be filed. This is typically done by the spouse with whom they’ve previously filed jointly, or by a legally appointed representative of the deceased. In the case of a surviving spouse, they may continue to file jointly for two additional years if there are dependents and they have not remarried.

What the IRS requires

In most cases, the person responsible for filing the return, such as a surviving spouse, is likely named on the will. Whoever is filing the final return must report all income and financial information up to the time of the deceased person’s earthly departure. If there is no spouse, many times a child, trustee, close family member, or business partner is appointed as representative. Click here to learn more about filing tax returns for a deceased parent.

Is official notification of death required by the IRS?

Typically, the IRS generally does not require formal notification of death to accompany the return. However, on the final return, it must be clearly noted DECEASED, indicating that said person has died. The date of death must also be noted. Electronic returns will automatically state this information when properly programmed. In some rare instances, a formal death certificate may be required.

Decisions must be made

A major decision one faces is whether to prepare the final return oneself or use a tax professional. The tax filer is ultimately responsible for the accuracy of the tax return; thus, it is imperative that the final return is properly prepared. For complicated tax situations, or in the case where one is unfamiliar with taxes and/or does not feel comfortable preparing the return, the guidance of a tax professional is wise.

Why hire a CPA?

A Certified Public Accountant, or CPA, is an expert who is licensed to provide accounting services to the public. They are knowledgeable in tax preparation, internal auditing, and perform other valuable tax and financial services. Note that a CPA is an accountant, but not all accountants are CPAs. CPA is a special professional designation earned by qualified accountants. They must adhere to rules of ethics.

What type of information is needed to prepare a return?

Regardless of whether a tax return is done by an executor or by a professional accountant, the tax filer must gather information regarding the decedent’s tax situation to prepare a final return. The following information is generally useful:

  • A death certificate. Some financial institutions may require a copy before releasing information. CPAs may request a copy of the death certificate to confirm that someone is indeed deceased. In some rare instances, it may also be needed for the final return.
  • Proof as court appointed representative of the estate or deceased. This clarifies who is responsible for filing a tax return on behalf of the deceased.
  • Copies of previous tax returns. If the representative of the deceased does not have copies of the most recent tax returns, there are ways to obtain them. One may file a power of attorney to enable their CPA to obtain copies of previous returns. Alternatively, one may submit Form 4506-T to the IRS to request a transcript of the previous tax return. One must likely demonstrate representative or executor status.
  • A tax organizer. This is a document given to clients by their tax preparer to help individuals collect, organize, and submit information needed to prepare an accurate return. This helps to ensure that vital information is not overlooked. It also helps to confirm that all tax deductions and credits are noted. Paperwork that is generally important to collect and provide to your CPA may include 1099s, mortgage information, bank statements, investment statements, and more.
  • A copy of the will. This may outline other important financial information that may be useful for tax return preparation.

An important job

Filing tax returns for the deceased is a task not to be taken lightly. When a taxpayer passes away, a final return is still expected. This responsibility generally falls onto the surviving spouse or appointed representative. If the responsible party fails to file taxes for a deceased person, the IRS may take legal action, for example, by placing a federal lien against the Estate.

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She helps people cope with death.

— The Indiana Attorney General’s Office made her stop.

By Johnny Magdaleno

As one of Lauren Richwine’s clients lay in bed, his stepdaughter wrote a note and slid it into the shirt pocket over his motionless chest. Friends from the local music scene cried at his side as they prepared to carry the former bassist out of his home, permanently.

Cancer killed the young father. Instead of being rushed away to prepare for burial, his family kept him at home for a day. He rested in a sunroom, Richwine said, where the people in his life grieved and his children climbed in and out of bed with his body.

Richwine runs Death Done Differently — a Fort Wayne company specializing in “community-led death care.” She does end-of-life planning and informs people about alternatives to conventional funerals.

“Some people (say), ‘Isn’t it going to be traumatizing to the children, or couldn’t it be traumatic to see or be with someone after they’ve died?’” Richwine told IndyStar. “And I think, in my experience, it’s the opposite. It’s traumatic when we remove them too fast because we haven’t had time for this to really sink in.”

But as of this week, her work is on hold. On Wednesday she launched a new lawsuit against Indiana after the state shut her business down.

Attorney general’s office says she needs funeral director license

Death Done Differently caught the attention of the Indiana Attorney General’s Office in 2021. Someone filed a complaint against Richwine with the office. The complaint didn’t allege she harmed or deceived anyone, according to a copy reviewed by IndyStar, but said she “may require a license from the state to provide funeral services.” It doesn’t say who complained.

After giving Richwine the chance to reply, the office asked the State Board of Funeral and Cemetery Service for a cease-and-desist order.

Death Done Differently “offers several services that constitute the practice of funeral service,” the office said. It points to services like discussing body disposition, helping with legal paperwork and “readings, music, conversation, healing touch, or general companionship with the dying individual.”

State law says the practice of funeral service includes “the counseling of individuals concerning methods and alternatives for the final disposition of human remains.”

The board agreed. It issued a cease-and-desist order against Richwine on Aug. 21.

Richwine says her work is protected by the First Amendment

Her lawsuit claims Indiana is restricting her free speech because her work is speaking with and educating clients. Richwine’s attorneys want a judge in federal Northern District of Indiana court to issue an injunction that would stop the state from denying her “ability to speak with adults regarding death care.”

“There are a lot of people who currently talk about funeral options, funeral care that are not funeral directors,” Richwine said.

She gave the example of pastors. Some have “healthy relationships” with funeral homes and can be a link between congregants and funeral providers.

“Are they going to now be not allowed? Where does this end if they don’t want you talking about any of the laws and any of the funeral code at all?”

IndyStar has asked the attorney general’s office for its response to the lawsuit.

Former client: ‘She was just there to facilitate’

Andrea Schwartz’s family called Richwine hours after her daughter, Nova, was stillborn. It happened five years ago.

She told IndyStar Richwine played a different role than the funeral home her family worked with.

“Our experience was she was just there to facilitate, give us information, show us what our choices were, support us through it,” Schwartz said. “But then as far as the actual funeral, all the procedures and everything were done through a funeral home with their own funeral director.”

Richwine gave “warm support and comfort.” It was like night and day compared with Schwartz’s past experiences with elderly deaths in the family.

“It was never a positive experience” working with corporate funeral homes, she said. It was cold and impersonal, “like you’re just a number to them.”

“Kind of feeling like you were at a car sales lot the whole time,” Schwartz said.

Lawsuit says traditional funerals ‘medicalize’ death

Richwine’s lawsuit says she advises people about options other than the “historically recent innovation” of “embalming the body, holding a ceremony in a funeral parlor, and cremation or burying in an expensive casket.”

That process “medicalizes death,” the suit claims. It points to home funerals as one alternative, adding that bodies don’t present health risks to those in their vicinity for at least three days “in ordinary circumstances.”

“There’s a weird dynamic at work, where we have been normalized to relate to someone when they die as … not really belonging to us anymore,” Richwine said. “That’s part of what my work comes out of, this very strong belief that they still belong to those loved ones and the relational ties that were created, those deserve to be honored and respected.”

Complete Article ↪HERE↩!