What Is a Personal Representative for Taxes?
In the language of taxes, a personal representative is an individual responsible for handling the estate of someone who has died. It's the personal representative's job to make sure that all the deceased person's bills are paid, including any taxes, and to distribute the person's property to the family or other heirs.
- Executor, administrator, representative
- Tax duties of the personal representative
- Employer identification number
Executor, administrator, representative
A personal representative can be an executor or an administrator of the estate of a person who has died. If the "decedent" (the person who died) named someone to handle the estate in his or her will, that person is the executor. If the will doesn't name an executor, or if the named executor can't or won't do the job, a court can appoint an administrator to handle the estate.
The names are different, but the responsibilities are the same. The IRS uses the term "personal representative" to refer to both, since in either case, the individual is representing the estate before the IRS.
Tax duties of the personal representative
According to the IRS, a personal representative has three tax-related responsibilities:
- Get an employer identification number for the estate. When you die, your Social Security number effectively dies with you. Your belongings pass to your estate, which needs an ID number of its own.
- File all the necessary tax returns for the decedent and the estate.
- Pay the taxes owed by the decedent and the estate. Representatives usually pay these taxes using the assets in the estate, not from their own money.
Employer identification number
For tax purposes, an estate needs an employer identification number, or EIN. Just as individuals need Social Security numbers to identify themselves to the IRS, entities such as businesses, organizations, estates and trusts need EINs.
Applying for an EIN on behalf of an estate is fairly simple and can be done online, by fax or through the mail. When you apply for an EIN on the IRS website, you usually can get the number immediately. By fax, it can take four days; by mail, it can take a month or more.
Filing necessary tax returns
Taxes that the personal representative may have to file include:
- Personal income taxes. The representative is responsible for filing an income tax return for the decedent for the year in which they died if required. If the decedent was married, the representative can work with the surviving spouse to prepare and file a joint return.
- Estate income taxes. Most estates earn income. Often the decedent's investments pass to the estate and can earn interest, dividends, rent, royalties or other money. If this is the case, the representative must file an income tax return on behalf of the estate using Form 1041.
- Estate taxes. Relatively few estates have to pay federal estate tax—as of 2023, the tax applied only to estates in excess of $12.92 million and this amount increases to $13.61 million for 2024. But if estate tax is due, it's the personal representative's responsibility to file the estate tax return, Form 706.
Paying the taxes
Just as a decedent's assets pass to the estate, so do the decedent's debts and other financial obligations. In general, taxes take precedence over other obligations—usually, they must be paid before the estate's assets can be distributed to the heirs. Taxes are usually paid out of the estate’s assets.
Although representatives are not expected to pay the decedent's taxes out of their own pocket, they are legally liable for ensuring that the taxes get paid to the extent allowed by the estate's assets. Gross negligence or outright tax evasion by an executor can be punished with civil fines and criminal penalties.
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