1. File the Final Individual Income Tax Return (Form 1040)
The decedent’s final personal income tax return must be filed for the year of death.
- Deadline: Generally due by April 15 of the year following the death.
- Report all income earned up until the date of death.
- Mark the return as “Deceased,” and sign it as the estate’s personal representative.
2. File the Estate’s Income Tax Return (Form 1041)
If the estate generates income after the individual’s death (e.g., rent, dividends, interest), you must file Form 1041 – the U.S. Income Tax Return for Estates and Trusts.
You’ll need:
- An EIN (Employer Identification Number) for the estate
- Proper documentation of estate income and expenses
- To file annually until the estate is closed
3. Pay All Taxes Owed
Before you can close the estate, all federal and state taxes must be paid:
- Final individual income tax
- Estate income tax
- Any estate or inheritance tax (if applicable)
Failure to pay can delay estate closure or lead to penalties.
4. Request IRS Closing Letter or Transcript
Once all returns are filed and taxes paid, request confirmation from the IRS.
- Use Form 4810 to request a prompt assessment of any taxes owed.
- Request an IRS Estate Tax Closing Letter using Form 5495 or request a transcript via IRS Form 4506-T.
5. Distribute the Remaining Assets
Once tax matters are cleared:
- Pay off any remaining debts
- Distribute remaining estate assets to beneficiaries
- Maintain detailed records for each transaction
6. Close the Estate’s EIN with the IRS
There is no formal “closure” process for an EIN, but after all filings are complete and the estate is closed, it becomes inactive.
Optional:
- Send a letter to the IRS requesting the EIN be closed: nginxCopyEdit
Internal Revenue Service Cincinnati, OH 45999
Include:
- Estate EIN
- Full name of the decedent
- A copy of the death certificate and Form 1041
Conclusion
Knowing how to close an estate with the IRS is vital to legally finalize a loved one’s financial legacy. From filing the necessary forms to obtaining closing letters, careful attention to detail is essential. If you’re unsure at any step, consult a tax professional or estate attorney.
