Deceased Taxpayers

[rabrahamadvisory]

Hello, I have a client who parents died together in a car accident in 2023. I want to make sure I am filing the correct number of tax returns for 2023. Please let me know if the following is correct. 

1. File final joint return (Form 1040) ending on date of death (parents have been filing jointly)

2. File 1041 for father for remainder of the year allocating his portion of income to the return. 

3. File 1041 for mother for remainder of the year allocating her portion of income to the return. 

If 2 and 3 are correct, do you provide the beneficiary information on both 1041s? Also, it is my understanding the value of the estate is under the 2023 UTC. 

[George4Tacks]

What you stated is correct. You need to look at the death certificates to determine which parent died first (look for time of death.) The second to die is likely the only beneficiary of the first to die. You need to look carefully at the will or trust to determine who the beneficiaries are and they should appear on the 1041 showing their share of any distribution. They would likely get a K-1 showing no income to report, since I would expect no distributions had been made for 2023. 

[sjrcpa]

The 1041s can use a fiscal year.

[rabrahamadvisory]

Thank you @George4Tacks . 

I don't believe any distributions were made in 2023 as I believe they were still undergoing the probate process in Oregon. 

Regarding your point on listing beneficiaries: are you stating that according to each will/trust document, I should list beneficiaries on both the mother and father's 1041?

[George4Tacks]

Yes, I would list all beneficiaries. I think they should get a K-1 saying that there is no taxable income for the year, if that is appropriate. Once distributions are done, then the K-1 would reflect their share of taxable income. 

[rabrahamadvisory]

Thanks @George4Tacks !