Detailed Answer
When a loved one dies in North Carolina, you must close out two main tax obligations: the decedent’s final personal income tax return and, if the estate’s value exceeds the federal filing threshold, a federal estate tax return. North Carolina does not impose a state‐level estate tax on estates of decedents who died on or after January 1, 2013.
1. Gather Required Documents
- Certified copy of the decedent’s death certificate
- Copy of the will (if one exists)
- Letters testamentary or letters of administration issued by the Clerk of Superior Court
- All W-2s, 1099s and other income records for the year of death
- Bank statements, brokerage statements and real estate deeds as of date of death
2. Identify the Personal Representative
The personal representative (PR), sometimes called the executor or administrator, must sign and file the tax returns. The court issues the legal authority through letters testamentary or letters of administration. Always attach a copy of those letters to the tax returns.
3. File the Final Personal Income Tax Return
You prepare two returns covering the period from January 1 of the year of death through the date of death:
- Federal Form 1040 (Final Return). The PR signs with the name of the decedent followed by “, deceased” and adds the title “Personal Representative.”
- North Carolina Form D-400 (Final Return). You file this by the usual April 15 deadline. See N.C. Gen. Stat. § 105-153.7 for due dates and filing details. View statute.
Attach a certified death certificate and a copy of your letters to both returns. Report all income the decedent received up to the date of death. Claim any deductions or credits the decedent qualified for during that same period.
4. File the Federal Estate Tax Return (Form 706), If Required
Only estates with a gross value above the federal exemption threshold must file Form 706. As of 2024, that threshold is $13.61 million. You must file within nine months of the date of death, or you may request a six-month extension by submitting IRS Form 4768 before the due date.
North Carolina does not impose a separate estate tax on estates of decedents who died on or after January 1, 2013.
5. Pay Any Tax Due and Maintain Records
- Submit payment for any tax balance with Form 1040 and Form D-400 by the filing deadline to avoid interest and penalties.
- Keep copies of all returns, schedules and supporting documents for at least three years after filing.
Key Documents and Steps at a Glance
- Certified death certificate
- Letters testamentary or letters of administration
- Decedent’s income records (W-2s, 1099s, etc.)
- Form 1040 (final federal return) signed by the personal representative
- Form D-400 (final North Carolina return) with supporting schedules
- Federal Form 706 and extension Form 4768 (if the estate exceeds the filing threshold)
- Inventory of estate assets and valuations
- Proof of payment and retained copies of filed returns
Filing a decedent’s tax returns can feel overwhelming. Pierce Law Group’s attorneys guide you through each step, help you meet deadlines and protect the estate from penalties. Contact us today by phone at (919) 341-7055 or by email at intake@piercelaw.com.
