Definition

• The tax responsibilities of a decedent are usually left to the surviving spouse, executor or administrator. An executor is the person who is named in the decedent's will to administer the estate of the deceased person. If the decedent had no will, the persons responsible for managing the decedent's affairs are the beneficiaries or the next of kin.
  
  

Duties

• In most instances, the executor is responsible for following through on the decedent's wishes as outlined in her will, paying creditors and filing the decedent's final tax return. The filing responsibility includes paying any tax due as a result of the final return or debt previously accumulated. If the decedent's debts are insufficient to pay the entire amount of the decedent's debts, the debts owed to the U.S. government are primary to the debts owed by other creditors, meaning executors must pay any debts owed to the U.S. government first. All other debts are secondary.
  
  

Considerations

• The IRS expects the executor of the decedent's estate to make a complete account of the decedent's assets and use those assets to pay any outstanding debts to the U.S. government. If the decedent fails to do due diligence to determine the existence or the amount of U.S. debts, the executor is held responsible by the IRS. This is because the IRS holds the decedent's personal representative personally responsible for any tax debt owed. The personal representative is held accountable in the amount that he paid other creditors ahead of the IRS. In short, if you were aware or should have been aware (had you done due diligence) of the decedent's debt, the IRS holds you responsible for not paying the debt in the exact amount that you paid out to other creditors instead of the IRS.
  
  

Filing

• If you are filing as a surviving spouse of a deceased person, then write the word DECEASED, the decedent's name and the date of death across the top of the decedent's tax return. Sign the return and write "filing as surviving spouse" in the signature area. If you are filing as a representative of the decedent's estate, file an estate return using Form 1041. Executors filing on behalf of the estate are required to apply for an employer identification number (EIN) on behalf of the estate prior to filing a return. Executors should write the decedent's name in the name space and the personal representative's name in any remaining space. Sign your name in the signature area. Mail the return to the IRS office that processes income tax returns for your area.