Who’s Entitled to the Tax Refund of a Deceased Person?

If the deceased was due to receive a tax refund, determining who is entitled to the money is a key issue for the surviving spouse, family members and estate representatives. In most cases, the IRS allows those legally responsible for the estate to claim the refund. The process depends on several factors, including the deceased’s marital status, whether a personal representative has been appointed, and whether the necessary forms have been submitted.

A financial advisor can help you identify and claim refunds for an estate, and manage it to comply with federal regulations.

When a person dies and is owed a tax refund, the IRS doesn’t automatically distribute it to their next of kin. The right to claim the refund typically depends on the filer’s relationship to the deceased and whether they are officially recognized to act on the deceased’s behalf. The refund may go to a surviving spouse, a court-appointed representative or another eligible individual who meets IRS guidelines and files the proper paperwork.

Below are the primary categories of individuals who may be entitled to the tax refund of a deceased person, along with their responsibilities and filing procedures.

If the deceased was married and the couple filed a joint return, the surviving spouse generally receives the refund. In this situation, the surviving spouse does not need to file Form 1310 (Statement of Person Claiming Refund Due a Deceased Taxpayer) to claim the refund. The IRS will automatically issue the refund in both names as part of the jointly filed return.

However, it’s important for the surviving spouse to note the date of death on the final tax return and indicate that it is a final return for the deceased. This helps the IRS processes the return correctly. The agency will typically issue the refund in both spouses’ names. The check or direct deposit may reflect the names of both the living and deceased spouse.

When a surviving spouse is not available, or the deceased was unmarried, the court must appoint someone to represent the estate. This person is typically called a personal representative, executor or administrator.

A court-appointed personal representative can claim the tax refund on behalf of the estate by filing the final tax return with the necessary documentation. The representative must attach a copy of the court certificate showing their appointment to the return. In most cases, Form 1310 is not required if a copy of the court appointment is included.

The IRS will issue the refund to the estate. That individual is then responsible for distributing the funds according to the deceased’s will or state inheritance laws. If the estate is large or includes significant assets, it’s highly recommended to involve an estate attorney to help with management and compliance.

In situations where there is no surviving spouse and no formal personal representative, another individual may still claim the refund. This is common when the estate is small or the heirs have agreed upon informal administration.

To claim a refund without court appointment, the claimant must file IRS Form 1310 along with the deceased’s final tax return. This form certifies that the individual is legally entitled to receive the refund, either as the next of kin or as someone authorized under state law.

The IRS will review the form and determine whether the claimant qualifies to receive the refund. This could require additional documentation, such as a death certificate, proof of relationship or written agreements among heirs. In this case, it’s essential to complete Form 1310 thoroughly and accurately to avoid delays or rejection.

While federal guidelines provide a framework for managing the tax refunds of deceased individuals, state-specific laws and procedures can vary significantly. It’s important to know your state’s requirements to handle the decedent’s tax matters correctly.

Most states require the filing of a final state income tax return for the deceased if they were residents or earned income in the state. For example, in Virginia, a surviving spouse or personal representative must file a Virginia income tax return if a federal return is filed. 

If filing electronically, indicate that the taxpayer is deceased. If filing on paper, fill in the “deceased” oval on the form. 

The process for claiming a state tax refund on behalf of a deceased person may differ from federal procedures. In Virginia, for example, if you’re the surviving spouse filing a joint return, any refund will be made payable to you. However, if you’re a court-appointed personal representative, the refund is issued as a check made payable to the deceased’s estate.

To have a refund issued to anyone aside from a surviving spouse or court-appointed representative, you must file IRS Form 1310. It is also necessary to include a copy of the death certificate with the return. 

Some states impose estate or inheritance taxes, which can affect the distribution of a decedent’s assets, including tax refunds. For example, Maryland imposes both estate and inheritance taxes. Meanwhile, states like Pennsylvania and New Jersey have inheritance taxes that vary based on the beneficiary’s relationship to the decedent.

State probate laws determine how a decedent’s estate is administered, which can impact the handling of tax refunds. Some states have simplified probate procedures for small estates, which may expedite the process of claiming a refund. However, requirements vary, so it’s a good idea to consult with an estate attorney familiar with your state’s probate laws.

When someone passes away and is owed a tax refund, that money does not disappear. The appropriate party—such as a surviving spouse, court-appointed representative, or other qualified individual filing Form 1310—may claim the funds. The IRS has established procedures for issuing the refund, but the process can be complex. During a difficult time, consulting a financial advisor or tax professional may help clarify how to handle a loved one’s final tax return or refund.

• A financial advisor can help you create a plan to minimize your tax liability. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
• If you want to know how much your next tax refund or balance could be, SmartAsset’s tax return calculator can help you get an estimate.

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