When a single taxpayer passes away or when a business closes, it is the responsibility of the executor of the taxpayer's estate and the owner of the business to file a final income tax return. The process of filing a final income tax return for an individual and a business are not dissimilar and both are required by the Internal Revenue Service (IRS). Final returns are not filed on special forms. They are filed on the same forms used by the taxpayer or business for previous tax years.
Final Returns for Individual Taxpayers
Obtain the individual income tax form required to file a final income tax return for the decedent, either a 1040, 1040A or 1040EZ, at your local tax or post office or on the IRS website. Use the decedent's tax information to fill out the information required on the income tax return.
File a form 1041, the form for estates and trusts, if the decedent set up an estate prior to his or her death. Use the same tax information for the 1041 that you used in Step One.
Write the word "deceased" next to the decedent's name where the taxpayer would usually sign his or her income tax return. Note the date of death at the top of the income tax return. Mail the return to the address listed in the instruction form for taxpayers of the state in which the decedent resided.
Final Returns for Business Taxpayers
File your final income tax return for your business like you would any other tax year. Business income tax return forms for partnerships, Limited Liability Companies, trusts and corporations each have a box on the first page of the return that you can check to mark the return as your final return.
Refer to the IRS checklist for closing a business for the extensive list of forms that need to be filed aside from your final business income tax return (see Resources). This checklist is important, as your particular type of business entity may or may not need to file all of the forms listed on the checklist. You will need to make that determination based on your business entity.
Attach a letter to your final income tax return stating the name and contact information of the person or business entity that is keeping the payroll records on file for your closed business. Mail your business income tax return to the address listed on the return's instructions for businesses located in your state.
If the deceased taxpayer is due a refund and you are not the surviving spouse or personal representative of the decedent you will need to file a form 1310 to petition for receipt of the income tax refund.
Final income tax returns for deceased taxpayers with a surviving spouse are not required as the spouse will continue to file as long as he or she meets the requirements for filing an income tax return.