The first thing that will need to be done in the event of a taxpayer's death is to determine who will receive inheritance or if the deceased will need to have a final tax return filed for them.
When you file with TurboTax Deluxe you will automatically get all the money-saving tax deductions and proper tax forms related to your inheritance, estate and trust income.
Inheritance Tax Requirements for the Beneficiary
If you have been named as the beneficiary on an inheritance, then you will be required to do the following:
List all assets and cash received
Place a fair market value on all assets
A fair market value will need to be given based on the current market value at the date of death. The beneficiary who will inherit assets whether it be a house, bonds, or stocks, will only be responsible for the tax on the appreciation after the time of death. It is very important to find fair market values on assets as soon as possible.
Final Federal Income Tax Form Filed by Executor of Inheritance
If you are not the beneficiary and only the executor of the estate, then you will be
required to file the taxpayer’s final tax return. The tax return will need to be filed on the same form as if the individual were still alive. Once you enter the taxpayer’s name, then you will write “deceased” next to the name. The federal income tax return will need to be filed before April 15th of the following year. If the taxpayer was married, then the widow or widower will be able to file a joint return for the year of the death.
Deductions for Federal Inheritance Tax Liability
You are able to deduct all of the deductible expenses that were paid before death. All medical bills can be deducted that were incurred during illness, up to one year after the taxpayer’s death. You are still able to claim the standard deduction or itemize regardless of the time during the year that the taxpayer died.
TurboTax Can Help You at Tax Time
If you're involved in estates, trusts and investments, it's worth your time to investigate a bit further. TurboTax Deluxe helps you find all the money-saving tax deductions related to your estate and trust income. You can try TurboTax for Free and let them do all the figuring for you.
Remember, when you use TurboTax to prepare your taxes, we’ll ask you simple questions about your situation and recommend the filing status, credits and deductions that will get you the biggest refund. Also, be sure to check out their free tax refund estimator and see how big your tax refund will be.
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