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Did you know that you need to keep up with tax documents and financial records of deceased individuals? If you are the executive of the will for someone, it is your job to have those records for at least 3 years. Many professionals will recommend that you keep them longer than that, around 6 to 7 years. Tax Crisis Institute can help you through this process and give you the information that you need. How Long Should You Keep Tax Records of a Deceased Person

Why Should You Keep Tax Documents For A Deceased Person?

The government can conduct audits on deceased individuals for up to 3 years after their death. If an audit were to occur, the tax documents would need to be presented. As the executor of this person’s property, it is your responsibility to have these items available. 

What Documents Should You Keep Up With?

For the next 6 to 7 years there are a few documents that you should keep in case any problems should arise. It is much easier to have these papers available than for you to not keep them. The ones that you should have are:

  • 1099’s
  • W-2’s
  • Brokerage Statements
  • Bank Statements

It is highly advised that you also have these other documents on hand as well:

  • Important Receipts
  • Charitable Donations
  • Retirement Account Contributions
  • Credit Card Statements
  • Real Estate Taxes
  • Canceled Checks
  • Sales Slips
  • Medical Bills

Do You file Taxes On Someone Who Is Deceased?

If a working individual dies suddenly in the year, the tax return still needs to be filed. The person who was left in charge of this person’s finances can file a 1310 to receive the tax return. A 1310 is solely dedicated to people who are filing for a deceased person. 

This is an important step to do, the government can file a lien if you don’t. If you neglect to file the deceased person’s taxes, it can put you in a position of owing that money. The government can put a lien on the money. That will require you to put this money due before any other bills you may have. 

What Is A Lien?

A lien is what can be put into place when you owe money. The government can do this when you owe back taxes, in fact, any individual can do this when you owe money. When a lien is put into place against you, the money you owe is put before anything else. 

It is filed on a piece of property that belongs to you. Such as land, a house, or a vehicle. The only way to make a lien go away is to pay the debt that is owed. If it is an amount that you can not pay upfront, the best thing to do is work out a payment arrangement. 

How Far Back Can The IRS Audit A Deceased Person?

Audits are oftentimes picked randomly through the computer. A deceased person can be spontaneously picked through this process. If the death was within six years, the documents will need to be presented. 

If there were any fraudulent activities that they owe money back on will need to be addressed, as well as back taxes. This money will come from any inheritance that there might be. It is not necessarily money that will have to come from you, but from the possessions, the person has left behind. 

Timeline For Forms To Be Filed

It is best to work with an accountant or tax professional to help you through all of these forms that need to be filed. You have certain timelines that you need to follow when filing them. There are extensions that you can apply for, but neglecting to do so can result in problems. Some of the documents that need to be followed could be:

  • Form 706
  • Form 4768
  • Form 1040
  • Form 1041
  • Form 1040-SR
  • Form 1310

It depends on the type of form that you are filing, some need to be turned in within a few months. It can take several months for you to receive a formal closing on estate tax. This is by far not a fast process, but a necessary one to get done.

What Happens If You Don’t Have The Documents?

Sometimes documents may not be able to be found or even accidentally thrown away. In this case, there is something you can do to regain these important documents. There is a tax form that you can file, called a 4506 to get a copy of tax returns. They come with a small fee, but it is minimal compared to if you need them for an audit. 

If it has been over 3 years, many times there won’t be an issue if you don’t have these documents. Although, it is highly recommended that you have them for at least 6. This is precautionary in case there is a question that arises. After this point, these documents can be discarded. 

A Tax Professional Can Help You

If you are unsure of all the steps that you need to take for a deceased relative or friend, you can hire the help of a tax professional. They will know all the obligations that you have and areas that you can take advantage of. Tax professionals can inform you of all the records and documents that you need to keep on hand as well. 

When you are audited by the government, it can make some people nervous. Not because there is a problem, mainly because they want to make sure they have everything that they need. When a deceased person is audited, it is a smoother process if you have all the documents available. 

Tax Crisis Institute has been a tax relief leader for over 30 years. When you work with the Tax Crisis Institute, we’ll make sure you don’t pay anything more than you owe! 

We currently service Bakersfield, Los Angeles, Orange County in California and Las Vegas in Nevada.

Call Tax Crisis Institute today for a FREE consultation!