Organize documentation related to deductions, tax payments, refunds, and potential estate income tax requirements. This includes medical expenses, charitable donations, mortgage interest, property taxes, estimated tax payments, and any documentation related to an estate EIN or Form 1041 if the estate generated income after death. Confirm whether a refund is due and whether additional filings are required. Maintain copies of all supporting records and track filing deadlines carefully. AfterMatters provides organizational guidance only and does not offer tax or legal advice.
Frequently Asked Questions
Costs
Can medical expenses be deducted on the final tax return?
Yes. Medical expenses paid during the year of death that exceed 7.5% of adjusted gross income can be deducted on the final Form 1040 if you itemize. This includes hospital bills, doctor visits, prescriptions, long-term care costs, and health insurance premiums. Alternatively, medical expenses of the deceased paid by the estate within one year of death can be deducted on the final return (by filing Form 1040 with an attached statement) rather than on the estate return. Choose whichever filing produces the larger tax benefit.
What charitable contributions are deductible?
Charitable donations made by the deceased during the year of death are deductible on the final personal return, subject to normal AGI limits (typically 60% for cash, 30% for appreciated property). Donations made by the estate (including bequests directed by the will) are deductible on the estate income tax return (Form 1041) without AGI limits. Keep receipts and acknowledgment letters for all donations over $250. Donations of property require a qualified appraisal for items valued over $5,000.
Documents
What property tax records do I need?
Collect property tax bills and payment receipts for all real estate owned by the deceased. Property taxes paid through the date of death are deductible on the final personal return (up to the $10,000 SALT cap). Property taxes paid by the estate after death are deductible on the estate return. If the property is sold during estate administration, the allocation of property taxes between the estate and the buyer is typically prorated based on the closing date.
Process
Does the estate need its own EIN and when do I need one?
The estate needs an Employer Identification Number (EIN) if it will earn more than $600 in income, have a bank account in its name, or file an estate income tax return (Form 1041). Apply for free at irs.gov (instant online issuance) or by mailing/faxing Form SS-4. You will need the EIN to open an estate bank account, receive payments owed to the estate, and file tax returns. Apply as soon as probate is opened or when you first need to conduct financial transactions for the estate.