Do You Have to Pay Your Dead Relative’s Back Taxes?
Taxes, change, and death are three certainties we have in life. The death of a relative can have a significant impact on an individual in terms of taking care of his or her estate. We are all are aware of this kind of scenario—of all the psychological consequences death represents. Back taxes, as it should be known, are partially or fully unpaid taxes from the year that they were due.
As the Internal Revenue Service (IRS) clearly states, the income tax return of a decedent is prepared in the same way as if the person were still alive. All income must be reported and all the deductions to which the deceased is entitled may be claimed. This also means that all debt must be paid.
Are We Responsible for our Relative’s Unpaid Debt?
To answer it simply: no. If a person dies leaving unpaid taxes, the relatives are not responsible for the debt. The only individual held responsible for a decedent’s debt is the estate executor under specific circumstances. The estate executor becomes responsible if he or she distributes the assets according to what is stated in the will before the taxes have been paid, or if he or she is aware of the existences of debt and stills transfers or sells the property of the deceased, ignoring the fact that a payment must be made.
More about Estate Taxes
Estate taxes are taxes that are imposed on the net value of a decedent’s property before it is distributed to the rightful heirs. If a person dies owing money to the IRS, his or her assets will be put under a legal claim known as a tax lien. This means that said assets cannot be neither sold nor transferred to another person until everything has been paid off. If the debt cannot be financed in its entirety, then the IRS has the right to seize the property.
Exceptions to the Rule
Now, as with every rule, there are some exceptions. This means that in some cases, relatives are held responsible for unpaid taxes if:
- They co-signed for a loan that remains unsettled.
- Had a joint account.
- The spouse is responsible for the debt left by the decedent in some states.
- They shared debt.
Relatives are not held responsible for their deceased relative’s unpaid taxes under certain circumstances. However, they cannot reclaim their inheritance or any debt remaining after the relative’s death has been settled. Moreover, if the debt cannot be discharged, the IRS is in the complete right to seize said property.
You can find more information about anything tax-related on the Success Tax Relief website. To go directly to our FAQs section, click here. You can also give a Success Tax Relief consultant a call today at 877-825-1179. We will answer any doubts you might have! If the internet works best for you, you can contact us online and learn everything you need about the taxation process before tax season arrives again!