As they saying goes, the only things certain in life are death and taxes. Even if the event of death, taxes are still due for the year and a final tax return must be filed. If you are in charge of a decedent's estate, you want to ensure you have her financial documents on hand to properly prepare and file taxes. The length of time you should be keeping tax records after death – and supporting documents – varies depending on the circumstances. However, there are guidelines the Internal Revenue Service sets for all taxpayers.
The length of time you should hold on to a deceased relatives tax records varies, but generally falls between three and six years.
Income Tax Due Date
After the death of an individual, the personal representative of the estate or the administrator is responsible for filing the tax return. If no one is appointed, a survivor must file on behalf of the decedent. The taxes are due the same date for everyone, with no exceptions made for death. For example, if the individual passes away in March, the taxes are due April 15 of the following year. When preparing the taxes, use the same form that would have been used if the taxpayer were alive. After the taxpayers' name, write "deceased."
The IRS generally has a three-year statute of limitations to audit a tax return. You should be able to produce records and supporting documents proving any income, deductions or credits you claimed on the return for at least three years from the date of filing. In case issues arise from the decedent's returns filed before death, keep federal and state income tax returns and statements for at least three years.
Income Reporting Errors
In case you may have overlooked income or were unsure of all the sources of income the decedent had received, hold onto the records for at least six years to be on the safe side. The IRS requires you to be able to produce tax records and financial documents for as far back as six years if you fail to report more than 25 percent of the decedent's gross annual income. If the final tax return was not filed or you are accused of committing tax fraud, there is no statute of limitations for conducting an audit.
Which Important Documents To Keep
Deciding which papers to keep when someone passes may seem overwhelming. But, you do not have to keep everything for tax purposes. Lighten the load by tossing documents that no longer serve a purpose. For instance, you can throw away weekly pay stubs after verifying the information matches the taxpayer's W-2 Form. If there are any discrepancies, hold onto the pay stubs to be on the safe side. Save bank and interest statements along with cancelled checks and receipts that relate directly to any deductions you claim for the decedent.
Jeannine Mancini, a Florida native, has been writing business and personal finance articles since 2003. Her articles have been published in the Florida Today and Orlando Sentinel. She earned a Bachelor of Science in Interdisciplinary Studies from the University of Central Florida.