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taxmap/pubs/p3920-000.htm#TXMP4ed1663b
Publication 3920

Tax Relief for Victims of Terrorist Attacks


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taxmap/pubs/p3920-000.htm#TXMP4b9303e0Introduction

This publication explains some of the provisions of the Victims of Terrorism Tax Relief Act of 2001. Under this Act, the federal income tax liability of those killed in the following attacks is forgiven for certain tax years.
The Act also provides other types of relief. For example, it provides that the following amounts are not included in income.
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Worksheet A. Figuring the Tax To Be Forgiven

       (For Decedents Who Filed a Return as Single, Married Filing Separately, Head of Household, or  
       Qualifying Widow(er))

    (A)
First
Eligible Year (1994 or 2000)
(B)
Second
Eligible Year (1995 or 2001)
(C)
Third
Eligible Year (1996 or 2002)
1Enter the years eligible for tax forgiveness.1   
2Enter the total tax from the decedent's income tax return. See Table 1 on page 5 for the line number for years before 2002.2   
3Enter the following taxes, if any, shown on the decedent's income tax return. (These taxes are not eligible for forgiveness.)    
 aSelf-employment tax.3a   
 bSocial security and Medicare tax on tip income not reported to employer.3b   
 cTax on excess contributions to IRAs, Coverdell education savings accounts (formerly Ed IRAs), or Archer MSAs (formerly medical savings accounts).3c   
 dTax on excess accumulation in qualified retirement plans.3d   
 eHousehold employment taxes.3e   
 fUncollected social security and Medicare or RRTA tax on tips or group-term life insurance.3f   
 gTax on golden parachute payments.3g   
4Add lines 3a through 3g.4   
5 Tax to be forgiven. Subtract line 4 from line 2.5   
Note. If the total of columns (A), (B), and (C) of line 5 (including any amounts shown on line 15 of Worksheet B) is less than $10,000, also complete Worksheet C.
  • Attach the computation of the tax to be forgiven or a copy of this worksheet to the decedent's final income tax return or amended tax return (Form 1040X) for each year listed on line 1.
  • If filing Form 1040X for an eligible year, enter the amount from line 5 above on Form 1040X in column B of line 10 as a decrease in tax. The IRS will determine the amount to be refunded.

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Useful items

You may want to see:


Publication
 547 Casualties, Disasters, and Thefts
 559 Survivors, Executors, and Administrators
Form (and Instructions)
 706: United States Estate (and Generation- Skipping Transfer) Tax Return
 1040: U.S. Individual Income Tax Return
 1040NR: U.S. Nonresident Alien Income Tax Return
 1040X: Amended U.S. Individual Income Tax Return
 1041: U.S. Income Tax Return for Estates and Trusts
 1310: Statement of Person Claiming Refund Due a Deceased Taxpayer
 4506: Request for Copy or Transcript of Tax Form
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Tax Forgiveness


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previous topic occurrence Tax Forgiveness next topic occurrence

The IRS will forgive the federal income tax liabilities of decedents who died as a result of the Oklahoma City attack, September 11 attacks, and anthrax attacks. Income tax is forgiven for these decedents whether they were killed in an attack or in rescue or recovery operations. Any forgiven tax liability owed to the IRS will not have to be paid. Any forgiven tax liability that has already been paid will be refunded. (See Refund of Taxes Paid, later.) To determine the amount of tax to be forgiven, read Years Eligible for Tax Forgiveness first. Then read Amount of Tax Forgiven.
Deposit
Decedents whose total forgiven tax liability for all eligible years is less than $10,000 are entitled to $10,000 minimum relief. Even decedents who were not required to file tax returns for the eligible tax years are entitled to $10,000 minimum relief. See Minimum Amount of Relief later under Amount of Tax Forgiven.
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Years Eligible for Tax Forgiveness


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Years Eligible for Tax Forgiveness

The following paragraphs explain which years are eligible for tax forgiveness.
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Oklahoma City attack.


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For those who died from this attack, income tax is forgiven for 1994 and all later years up to and including the year of death.
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Example 1.

A man was killed in the bombing of the federal building in Oklahoma City on April 19, 1995. His income tax is forgiven for 1994 and 1995.
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Example 2.

A woman was wounded while walking outside the federal building in Oklahoma City on April 19, 1995. She subsequently died of her wounds in 1996. Her income tax is forgiven for 1994, 1995, and 1996.
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September 11 attacks and anthrax attacks.


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For those who die from these attacks, income tax is forgiven for 2000 and all later years up to and including the year of death.
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Example 1.

A Pentagon employee died in the September 11 attack. Her income tax is forgiven for 2000 and 2001.
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Example 2.

A visitor to the World Trade Center died in 2002 of wounds he sustained in the September 11 attack. His income tax liability is forgiven for 2000, 2001, and 2002.
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Amount of Tax Forgiven


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The IRS will forgive the decedent's income tax liability for all years eligible for tax forgiveness. On a joint return, only the decedent's part of the joint income tax liability is eligible for forgiveness.
To figure the tax to be forgiven, use the following worksheets.
Deposit
Do not complete Worksheet A or B if the decedent was not required to file tax returns for the eligible tax years. Instead, complete Worksheet C and file a return for the decedent's last tax year. See Minimum Amount of Relief, later.
Phone
If you need assistance, call the IRS at 1–866–562–5227 Monday through Friday during the following times.  
  • In English–7 a.m. to 10 p.m. local time.
  • In Spanish–8 a.m. to 9:30 p.m. local time.
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Both spouses died.


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If both spouses died as a result of a terrorist attack and they filed a joint return for an eligible tax year, fill out Worksheet B for each spouse for that year. Do this to determine if each spouse qualifies for the minimum relief of $10,000 (discussed later under Minimum Amount of Relief).If you are certain that neither spouse's total forgiven tax liability for all eligible years is less than $10,000, skip Worksheet B. However, attach a computation of the forgiven tax liability to the final income tax return or amended tax return for each eligible year. The forgiven tax liability is the total tax shown on the joint return minus the taxes listed in the instructions for line 4 of Worksheet B.
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Residents of community property states.


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If the decedent was domiciled in a community property state and the spouse reported half the community income on a separate return, the surviving spouse can get a refund of taxes paid on his or her share of the decedent's income for the eligible years. Also, all of the decedent's income taxes paid for the eligible years will be refunded to either the executor or administrator of the estate, or to the surviving spouse if there is no legal representative.
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Worksheet B. Figuring the Tax To Be Forgiven

       (For Decedents Who Filed a Joint Return)

   (A)
First
Eligible Year (1994 or 2000)
(B)
Second
Eligible Year (1995 or 2001)
(C)
Third
Eligible Year (1996 or 2002)
1Enter the years eligible for forgiveness.1   
2Enter the decedent's taxable income. Figure taxable income as if a separate return had been filed. See the instructions.2   
3Enter the decedent's total tax. See the instructions.3   
4Enter the total, if any, of the decedent's taxes not eligible for forgiveness. See the instructions.4   
5Subtract line 4 from line 3.5   
6Enter the surviving spouse's taxable income. Figure taxable income as if a separate return had been filed. See the instructions.6   
7Enter the surviving spouse's total tax. See the instructions.7   
8Enter the total, if any, of the surviving spouse's taxes listed in the instructions for line 4.8   
9Subtract line 8 from line 7.9   
10Add lines 5 and 9.10   
11Enter the total tax from the joint return. See Table 1 on page 5 for the line number for years before 2002.11   
12Add lines 4 and 8.12   
13Subtract line 12 from line 11.13   
14Divide line 5 by line 10. Enter the result as a decimal.14   
15 Tax to be forgiven. Multiply line 13 by line 14 and enter the result.15   
Note. If the total of columns (A), (B), and (C) of line 15 (including any amounts shown on line 5 of Worksheet A) is less than $10,000, also complete Worksheet C.
  • Attach the computation of the tax to be forgiven or a copy of this worksheet to the decedent's final income tax return or amended tax return (Form 1040X) for each year listed on line 1.
  • If filing Form 1040X for an eligible year, enter the amount from line 15 above on Form 1040X in column B of line 10 as a decrease in tax. The IRS will determine the amount to be refunded.
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Instructions for Worksheet B  


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Table 1. Total Tax Line on Decedent's Return

Note: Use this table to find the total tax line on the decedent's income tax return.*

Form19941995199620002001
1040 Line 53Line 54 Line 51Line 57 Line 58
1040ALine 27Line 28Line 28Line 35File Form 1040
1040EZLine 9Line 10Line 10Line 10
TeleFile Tax Record ** Line ELine JLine K
1040NRLine 51Line 52Line 49Line 54Line 54
1040NR–EZN/ALine 17Line 17Line 18File Form 1040NR
* Line numbers for the 2002 forms were not available when this publication went to print.
** File Form 4506 to get a transcript of the decedent's account.
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Lines 2 and 6.
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Allocate income and deductions in the same manner they would have been allocated if the spouses had filed separate returns.
Allocate wages and salaries to the spouse who performed the services and received the Form W-2. Business and investment income (including capital gains) are generally allocated to the spouse who owned the business or investment that produced the income. Income from a jointly owned business or investment should be allocated equally between the spouses unless there is evidence that shows a different allocation is appropriate.
Allocate business deductions to the owner of the business. Allocate personal deductions (such as itemized deductions for mortgage interest and taxes) equally between the spouses unless there is evidence that shows a different allocation is appropriate.
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Lines 3 and 7.
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Figure the total tax as if a separate return had been filed. The total tax is the tax that would have been entered on the tax return line shown in Table 1 if a separate return had been filed. When figuring the tax using the Tax Table or Tax Rate Schedule, use the "Married filing separately" column in the Tax Table or Tax Rate Schedule Y-2.
When figuring the total tax, allocate credits and other taxes, if any, in the same manner as they would have been allocated if the spouses had filed separate returns. If a credit would not have been allowed on a separate return, allocate the credit shown on the joint return between the spouses. Examples of credits generally not allowed on a separate return are the child and dependent care credit, credit for the elderly, adoption credit, education credits, and earned income credit.
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Line 4.
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Enter the total, if any, of the following taxes.
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Minimum Amount of Relief


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The minimum amount of relief is $10,000. If the decedent's total forgiven tax liability for all eligible years is less than $10,000, the difference between $10,000 and the total forgiven tax liability for those years will be treated as a tax payment for the decedent's last tax year. The IRS will refund the difference as explained under Refund of Taxes Paid. Use Worksheet C to figure the additional tax payment. But first complete Worksheet A or B, unless the decedent was not required to file tax returns for the eligible tax years.
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Example 1.

An individual who died in the September 11 attacks had an income tax liability of $-0- for 2000 and $6,400 for 2001. The $6,400 is eligible for forgiveness. The IRS will forgive $6,400 and treat the difference between $10,000 and $6,400 ($3,600) as a tax payment for 2001.
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Example 2.

A child who died in the September 11 attacks had no (-0-) income tax liability for 2000 or 2001. The IRS will treat $10,000 as a tax payment for 2001.
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Income received after date of death.


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Generally, income of the decedent received after the date of death must be reported on Form 1041 if the estate has gross income for the tax year of $600 or more. Examples are the final paycheck or dividends on stock owned by the decedent. However, this income is exempt from income tax and is not included on Form 1041 if it is received:
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Nonqualifying income.
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The following income is not exempt from tax. The tax on it is not eligible for forgiveness. The following are examples of nonqualifying income.
Deposit
If you are responsible for the estate of a decedent, see Publication 559. Publication 559 discusses how to complete and file federal income tax returns and explains your responsibility to pay any taxes due.
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Instructions for lines 2–9 of Worksheet C.
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The tax that would have been payable on the exempt income (discussed earlier) must be considered when determining whether a decedent is entitled to the $10,000 minimum relief. To figure the tax that would have been payable, you can use lines 2 through 9 of Worksheet C. Or, if special requirements are met, you can use the alternative computation instead. See Alternative computation, later.
You have to use lines 2–9 (or the alternative computation) to figure the tax that would have been payable even if Form 1041 was not required to be filed. Use Form 1041 to figure what the taxable income would be without including the exempt income. Then enter that taxable income (even if a negative number) on line 2 of Worksheet C (or line 1 of Worksheet D, Alternative Computation of Tax on Exempt Income (Line 9 of Worksheet C)).
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Alternative computation.
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Instead of using lines 2–8 of Worksheet C to figure the tax on exempt income (line 9 of Worksheet C), you may be able to use Worksheet D. You can use Worksheet D to figure the tax on the exempt income payable by the estate and its beneficiaries only if both of the following requirements are met.
  1. The estate claimed an income distribution deduction on line 18 (Form 1041).
  2. Each beneficiary submits the information necessary to refigure the income tax payable on the exempt income received from the decedent's estate.
If requirement (2) is met but requirement (1) is not, you can still use Worksheet D if: If you use this alternative computation, skip lines 2–8 of Worksheet C and enter the amount from line 8 of Worksheet D on line 9 of Worksheet C. Complete the rest of Worksheet C to determine the additional payment allowed.
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Worksheet C. Amount Treated as Tax Payment for Decedent's Last Tax Year

Caution: The decedent is entitled to minimum relief of $10,000. Complete this worksheet only if the total tax forgiven for all eligible years is less than $10,000.

1Minimum relief amount.
Note: Before completing lines 2–9, see Instructions for lines 2–9 of Worksheet C.
1 $10,000
2Enter the taxable income from line 22 (Form 1041) 2                
3Enter the distribution deduction from line 18 (Form 1041) .3                
4Add lines 2 and 3. 4                
5
Enter exempt income received after death minus expenses allocable to exempt income. (See Income received after date of death on page 5.)5                
6Add lines 4 and 5.6                
7Figure the tax on line 6 using Schedule G (Form 1041). 7                
8Figure the tax on line 4 using Schedule G (Form 1041). 8                
9 Tax on exempt income. Subtract line 8 from line 7. 9                
10

Enter the total of columns (A)–(C) from line 5 of Worksheet A or line 15 of Worksheet B. If the decedent was not required to file tax returns for the eligible tax years, enter -0-.10                
11Add lines 9 and 10.11             
12 Additional payment allowed. If line 11 is $10,000 or more, enter -0- and stop here. No additional amount is allowed as a tax payment. Otherwise, subtract line 11 from line 1 and enter the result.12             
Note. The amount on line 12 is allowed as a tax payment for the decedent's last tax year (usually 1995 or 2001).
  • Attach the computation of the additional payment allowed or a copy of this worksheet to the original or amended income tax return for the decedent's last tax year. If filing Form 1040, include the amount from line 12 above on the "Other payments" line of the form. Write "Sec. 692(d)(2) Payment" and the amount to the right of the entry space. Also indicate whether a Form 1041 is being filed for the decedent's estate.
  • If filing Form 1040X, include the amount from line 12 above on Form 1040X on line 15, columns (B) and (C). Write "Sec. 692(d)(2) Payment" on the dotted line to the left of the entry space.
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Worksheet D. Alternative Computation of Tax on Exempt Income (Line 9 of Worksheet C)
1Enter the taxable income from line 22 (Form 1041)1             
2Enter exempt income received after death minus expenses allocable to exempt income. (See Income received after date of death on page 5.)2             
3Add lines 1 and 23             
4Figure the tax on line 3 using Schedule G (Form 1041).4             
5Figure the tax on line 1 using Schedule G (Form 1041).5             
6 Estate's tax on exempt income. Subtract line 5 from line 46             
7 Beneficiaries' tax on exempt income. Figure the total tax that would have been payable by all beneficiaries. Do this by including in each beneficiary's gross income the exempt income received from the decedent's estate and refiguring the income tax. Add the amounts by which each beneficiary's income tax is increased.7             
8Add lines 6 and 7. Enter this amount on line 9 of Worksheet C.8             
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Refund of Taxes Paid


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Refund of Taxes Paid

The IRS will refund the following forgiven income tax liabilities.
  1. Income tax liabilities that have been paid.
  2. Income tax liabilities treated as paid because the total tax liability for all years eligible for tax forgiveness is less than $10,000. See Minimum Amount of Relief, earlier.
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Example 1.

A man who died in the September 11 attacks had an income tax liability of $7,500 for 2000 and $6,500 for 2001. The total, $14,000, is eligible for tax forgiveness. However, he paid only $13,000 of that amount. The IRS will refund the $13,000 paid.
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Example 2.

A child who died in the September 11 attacks had no income tax liability for 2000 or 2001. The child qualifies for the minimum relief of $10,000. The $10,000 is treated as a tax payment for 2001 and will be refunded.
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Period for filing a claim for credit or refund.


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To obtain a tax refund on a previously filed income tax return, file an amended return (Form 1040X or an amended Form 1041) within 3 years from the time the return was filed or 2 years from the time the tax was paid, whichever is later. For example, you have until April 15, 2004, to file an amended return on a 2000 Form 1040, 1040A, or 1040EZ that was filed by April 16, 2001, and for which the tax was paid when due. To obtain a refund on a return that has not been filed, file the return within 3 years of the original due date of the return.
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Extension of time for victims of Oklahoma City attack.
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The period described above has been extended for victims of the Oklahoma City attack. Survivors and personal representatives of these victims have until January 22, 2003, to file an original or amended return.
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How To Claim Tax Forgiveness


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Use the following procedures to claim income tax forgiveness.
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Which Form To Use


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Which Form To Use

The form you use depends on whether an income tax return for the eligible year was already filed for the decedent.
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Return required but not yet filed.


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File Form 1040 if the decedent was a U.S. citizen or resident. File Form 1040NR if the decedent was a nonresident alien. A nonresident alien is someone who is not a U.S. citizen or resident.
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Return required and already filed.


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File a separate Form 1040X for each year you are claiming tax relief.
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Return not required and not filed.


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File Form 1040 only for the year of death if the decedent was a U.S. citizen or resident. File Form 1040NR if the decedent was a nonresident alien.
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Return not required but already filed.


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File Form 1040X only for the year of death.
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How to complete the returns.


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Fill out Form 1040 or 1040NR according to its instructions but do not reduce the decedent's tax liability by any taxes that will be forgiven. Attach to each return a computation of the income tax to be forgiven or a copy of Worksheet A or B. If filing Form 1040 or Form 1040NR, also attach any Forms W–2. If the total forgiven tax liability for all eligible years is less than $10,000, attach to the decedent's final return a computation of the additional tax payment allowed or a copy of Worksheet C.
Also, please write one of the following across the top of page 1 of each return. "KITA" means "killed in terrorist attack."
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Need a copy of a previously filed return?
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You will find it easier to prepare Form 1040X if you have a copy of the decedent's previously filed tax return. If you need a copy, use Form 4506. The IRS will provide a free copy of the tax return if you write "DISASTER" in the top margin of Form 4506. Attach Letters Testamentary or other evidence to establish that you are authorized to act for the decedent's estate. Send Form 4506 to the address shown in the form instructions.
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Taxpayer identification number.


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A taxpayer identification number must be furnished on the decedent's returns. This is usually the decedent's social security number (SSN). However, a nonresident alien who is not eligible to get an SSN should have an individual taxpayer identification number (ITIN). If the decedent was a nonresident alien, had neither an SSN nor an ITIN, and was not required to file a U.S. income tax return for any tax year, do not apply for an ITIN. You may claim a refund by filing Form 1040NR without an SSN or ITIN.
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Necessary Documents


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Please attach the following documents to the return or amended return.
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Proof of death.


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Attach a copy of the death certificate. If the Department of Defense issued DD Form 1300, Report of Casualty, you can attach that form instead of the death certificate.
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Form 1310.


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You must send Form 1310 with all returns and claims for refund, unless either of the following applies. A personal representative is an executor or administrator of a decedent's estate, as certified or appointed by the court. A copy of the decedent's will cannot be accepted as evidence that you are the personal representative.
Deposit
If you have proof of death but do not have enough tax information to file a timely claim for a refund, file Form 1040X with Form 1310. Include a statement saying an amended return will be filed as soon as the necessary tax information is available.
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Where To File


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The IRS has set up a special office for processing returns and claims for tax forgiveness. Use one of the addresses shown below. Where you file the returns or claims depends on whether you use the U.S. Postal Service or a private delivery service.
Caution
Please do not send these returns or claims to any of the addresses shown in the tax form instructions.
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U.S. Postal Service.


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If you use the U.S. Postal Service, file these returns and claims at the following address.

 
Internal Revenue Service  
P.O. Box 4053  
Woburn, MA 01888


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Private delivery service.


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Private delivery services cannot deliver items to P.O. boxes. If you use a private delivery service, file these returns and claims at the following address.

 
Internal Revenue Service  
Stop 661  
310 Lowell St.  
Andover, MA 01810


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Designated private delivery services.
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You can use the following private delivery services to file these returns and claims. The private delivery service can tell you how to get written proof of the mailing date.