Publication 559: Survivors Executors And Administrators

This Internal Revenue Service (IRS) publication guides individuals responsible for managing a deceased person's estate (personal representatives) in filing federal income tax returns and fulfilling tax obligations.

What's the purpose of Publication 559?

This publication guides personal representatives through filing federal income tax returns for the deceased and the estate, including income earned after the decedent's death. It also explains responsibilities regarding:

  1. Income tax: Calculating and paying income taxes on income earned by the estate, such as interest, dividends, rents, and royalties.
  2. Investment income and expenses: Reporting capital gains and losses on investments held by the estate, including stocks, bonds, and real estate.
  3. Deductions and credits: Claiming allowable deductions and tax credits for the estate.

Who should use it?

  • Executors: Individuals appointed by a will to manage the decedent's estate.
  • Administrators: Individuals appointed by the court to manage the estate when no will exists.
  • Beneficiaries: Individuals inheriting assets from the estate.

What does it cover?

A. Filing requirements and deadlines: Publication 559 explains which tax returns need to be filed for the decedent and the estate, as well as the deadlines for filing.

B. Income in respect of a decedent: This includes income earned by the decedent but received after their death, such as unpaid wages, accrued interest, or royalties.

C. Deductions in respect of a decedent: These are expenses incurred by the estate on the decedent's behalf, such as medical bills or funeral expenses.

D. Estate tax deduction: This deduction is available for certain estate-related expenses.

E. Investment income and expenses:

  1. Interest income: This includes interest earned on savings accounts, bonds, and other investments.
  2. Dividend income: This includes dividends received from stocks and mutual funds.
  3. Capital gains and losses: This refers to the profits or losses realized from the sale of capital assets, such as stocks, bonds, or real estate.
  4. Holding period: The publication clarifies how long an asset needs to be held to be considered long-term or short-term, as this impacts the tax rate on capital gains.