Can You Inherit a Deceased Person’s Tax Debt?
Think of it this way: if you expect to inherit a deceased person’s money and estate, then you can expect to inherit everything else that comes along with it, including tax debt.
Even though a loved one may have passed away, the outstanding debt to banks, credit card companies, and the IRS doesn’t go away. Their estate is normally expected to absorb the debt. Usually, these debts count against whatever money the deceased left behind them.
In the event of a death, the deceased person has ideally left an administrator to take care of his or her estate. If he or she did not do this, then an authority from probate will appoint one. That person will handle the responsibility of taking care of the deceased person’s taxes. Regardless of who is in charge, the individual in question will have to ensure that all of these obligations are settled in a manner that satisfies expectations from those to whom money is owed.
Death After Taxes
Even when a person passes away, his or her tax debt obligations need to be reported up until the day he or she expires. The Internal Revenue Service (IRS) is very adamant about having United States taxpayers being accountable for their tax debt, even after death. This might be where the IRS’s intimidating reputation comes from because when it comes to collecting taxes, not even death is an excuse. Whoever has inherited the responsibility of taking care of the deceased person’s estate needs to take action as if the tax debt is their own personal finances, which means they could hypothetically inherit a fairly sizable burden depending on what the tax situation looked like before the deceased passed away.
In spite of the fact that there have been a number of sweeping changes to tax law as of late, it doesn’t seem like the IRS has any intention on altering this policy in the near future.
Inheriting the Deceased Person’s Responsibility
This is nothing to take lightly. The IRS will not let up just because that person has passed away. They will still take all of the necessary actions to collect the tax money that is owed to them. The only difference is whom they’ll look to as the administrator. There’s a chance that if you are the sole heir of the deceased person’s estate, then that responsibility will lie with you.
Finding Help to Carry the Burden of an Estate
The death of a loved one isn’t an easy burden to bear, and it’s understandable how managing an estate can be overwhelming. That’s why it might be a good idea to look for trusted professionals to handle your loved one’s tax obligations for you. While there are lawyers who usually take care of managing the estate of the deceased, a team of tax professionals who have over 30 years of resolving tax issues of all kinds, including taking care of the tax responsibilities of the deceased, might be the best option for you. An attorney will work hard, but they don’t always have all of the IRS-related resources that tax professionals have access to.
Life After Death Regarding Taxes
If a person dies while they are still in debt to the IRS, then the IRS will immediately put a lien against the deceased person’s assets. It doesn’t matter if that person has named a beneficiary as the heir. Once the IRS’s debt has been paid in full, then any beneficiaries of the deceased estate will receive the remainder of the inheritance.
Also, for the following tax year, the administrator will still need to file annual taxes for the deceased for that year he or she expired. In that case, one of our tax lawyers can assist you with how to properly take care of filing that person’s annual taxes. However, the likelihood of submitting an annual filing remains if he or she still owes the IRS.
Keep in mind that in many cases the lien itself won’t collect very much money. There’s a strong possibility that the deceased didn’t owe very much to the IRS, and they’ll simply want to settle this debt and be on their way. While there have been many cases that deal with large sums of money which leave the beneficiaries of a will without any inheritance, these are somewhat less common than cases that deal with smaller sums.
Dealing with Difficult Issues at a Difficult Time
Death and taxes can be a complicated issue. Worst of all, it comes at a time when emotions are already running high and the bereaved are suffering because of their loss. Get in touch with the experts from Success Tax Relief for a free consultation today. Contact us online and talk to a specialist today. We’re here to help taxpayers in their time of dire need.