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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 4380
Experience:  Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986
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When we file my fathers final tax return, do we have to use

Resolved Question:

When we file my father's final tax return, do we have to use an EIN number? We were told his SSN is no longer valid but that doesn't make sense. I filed my mother-in-law's final tax return in January (she passed away in November 2009) and I used her SSN.
Submitted: 2 years ago.
Category: Tax
Expert:  Lane replied 2 years ago.
Yes, you would typically apply for the EIN for the estate, if you have been designated as the executor or personal representation.

Here are the basic duties:

The primary duties of a personal representative are to collect all the decedent's assets, pay his or her creditors, and distribute the remaining assets to the heirs or other beneficiaries.

The personal representative also must perform the following duties.

Apply for an employer identification number (EIN) for the estate.

File all income tax returns and the estate tax return when due.

Pay the tax determined up to the date of discharge from duties.

Other duties of the personal representative in federal tax matters are discussed in other sections of this publication. If any beneficiary is a nonresident alien, see Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities, for information on the personal representative's duties as a withholding agent.

Expert:  Lane replied 2 years ago.
Also, be sure to use the word "deceased" after the lat name

Here's a link to IRS publication 559, that outlines everything you should do to be thorough.

This will also tell you what you can do in terms of paying yourself for executing these requirements:

http://www.irs.gov/publications/p559/ar02.html#en_US_publink100099500

Customer: replied 2 years ago.
We already have an EIN but we want to file a regular 1040 for 2012 and just show Wayne is "deceased." We have already did the appraisement for probate in the county he lived in and are just waiting for the ads to see if he has any outstanding bills. We were just confused about the EIN. Like I said, when I did my mother-in-laws a few years ago, I didn't get an EIN for her.
Expert:  Robin D. replied 2 years ago.

Hello and thank you for using Just Answer,

Different expert here, please accept my condolences on your father's passing.

You do not use an EIN on your father's final 1040 form. You are correct in your understanding. The final personal return of the deceased still uses the SSN. To ensure all income the deceased earned is accounted for, a legal entity called an estate is automatically created at the time of death. Report on the estate return -, Form 1041 -, any income received after the date of death. This includes income earned from bank accounts or stock while the estate is in probate. The estate must request its own employer identification number (EIN) to use for filing purposes.
The EIN is not for the personal return. If your father would have been required to file a return for the year in which he died, , you must file a return on his behalf. Report income earned from the beginning of the year to the date of death on his final return using his SSN.

I sincerely XXXXX XXXXX information is helpful

Customer: replied 2 years ago.
I guess I'm confused why we need to file a 1041. Yes he will have interest from savings bonds and CDs, but can't we claim that on his 1040?
Expert:  Robin D. replied 2 years ago.

Hello again,

Any amounts earned after the date of death (if not transfered to heirs) woul dneed to be shown on the 1041. You see his only income personally would be up to the date of death, after that, either the individuals that inherited the ittems or his estate would need to assume the responsibility of the income.

Many assets listing a beneficiary - like a life insurance policy or a brokerage account - can bypass probate and be paid directly to the beneficiary. Although the money paid out from assets that bypasses probate is usually not taxable, interest earned on these assets after the death of your family member is taxable.

Since the asset is paid directly to beneficiaries, interest is considered income in respect of a decedent (IRD) if both of these apply:

  • It's interest the asset earns before it's paid out to beneficiaries.
  • The interest isn't reported on the deceased's return

If you are required to file a 1041 (the estate had income of more than $600 or there is a NonResident Alien beneficiary) you would use the EIN only on the 1041 form and not your father's 1040.

Robin D., Senior Tax Advisor 4
Category: Tax
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Experience: 15years with H & R Block. Divisional leader, Instructor
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Expert:  Lane replied 2 years ago.
Yes, again, as i said before, you need to get an EIN, or the IRS would not have told you to.

Income received after death is taxable on Form 1041, not the final 1040, even if reported on a 1099 under your father's social security number.

Interest income, dividend income, and capital gain distributions from mutual funds are often credited at the end of the month.

And investment income deposited after death is reported on Form 1041 not Form 1040.

Many times what you see is reporting the income from 1099s on the final 1040 for matching purposes followed by a subtraction allocating the income to Form 1041.

Hope this helps!

Customer: replied 2 years ago.

The IRS didn't tell us to get an EIN...it was the lady at the County Office for Probate. If all of the savings bonds and CDs were already accumulating interest, it doesn't seem like it is "new income." We have cashed them all and put them in a new bank account so we can divide them equally to the heirs. If we disperse all funds per the Will to all 6 heirs before there is $600 earned, wouldn't the Will be the governing paperwork and allow us to just file a 1040 at the end of the year? The 2 life insurance policies, the 12 CDs, closing the checking accounts, selling the 2 vehicles and household property (no real estate) only totaled $273,000 thus not requiring a Federal form 706 to be filed. There is a $20,000 CD with 1 of the heir's name on it maturing in October that will be able to pay any outstanding debts...we don't think there will be any debt.

Expert:  Lane replied 2 years ago.
First, investment income DEPOSITED after death is reported on Form 1041 not Form 1040. (Doesn't matter that the instruments were in place and generating income before death, it's when they were deposited, received by the estate).

The life insurance policies (death benefit proceeds from those policies paid to a beneficiary) are not taxable.

It sounds like some of the proceeds are return of principal,(CDs, Checking Accounts,etc.

Also the value of the assets and form 706 are estate (transfer) tax issues.

But the investment INCOME (not the CD principal, for example, but the Income from it (If earned by the estate and not the individual ...in other words, after death, but before the estate was closed) is what we're talking about here.

Its this issue that caused the probate court tot ell you that you needed a 1041, and an EIN ... because they saw enough income that they felt that there was estate income above the $600 number.

What I wold do is go to them and get them to define for you what they consider estate income, then if there is $600+, do the 1041 (and be sure to deduct it off the 1040)

I'm sorry for your loss, (and this doesn't make things easier, I know) but it appears that they have picked up on how many income producing instruments he had and are either guessing (and you may be able to prove them wrong) that there was more than 600 of interest that was credited after death.

Sorry for taking so long to get back. I was out on family business myself today./

Let me know if you have more questions.



Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 4380
Experience: Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986
Lane and other Tax Specialists are ready to help you

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Lane
Lane
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Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986