Does Social Security Notify the IRS When Someone Dies?

The death of a loved one is always difficult In the midst of grief, there are also many details to attend to. One of those details involves notifying certain government agencies and financial institutions of the death Many people wonder – does Social Security notify the IRS when someone dies?

The short answer is yes. The Social Security Administration does report deaths to the IRS However, you may still need to contact the IRS yourself Here is an overview of how Social Security and the IRS communicate about a death, and the steps you need to take with each agency.

How Social Security Notifies the IRS of a Death

In most cases, the Social Security Administration will report a person’s death to the IRS. This happens automatically thanks to an electronic data sharing system between the two agencies.

Usually, the process works like this:

• The funeral home reports the death to Social Security. This is required by law and is typically part of the services funeral homes provide to families.

• Social Security updates its records to note that the person has died.

• This information is shared electronically with the IRS The IRS also updates their records to indicate the person is deceased.

So in most cases, Social Security will notify the IRS of the death. The data sharing occurs electronically without the family having to do anything.

However, things don’t always happen automatically. Here are some scenarios where you may need to report a death to the Social Security Administration and/or the IRS yourself:

• If a funeral home wasn’t involved in the arrangements, they won’t report the death to Social Security. The family must contact Social Security directly.

• If there were delays with the death certificate, the funeral home may not report right away.

• Occasionally, there are errors or delays in the data transfer between agencies.

• If the family wasn’t aware they needed to notify these agencies and time has passed since the death.

For these reasons, it’s a good idea for families to follow up directly with both Social Security and the IRS after a death occurs. Don’t assume that the government agencies will handle all notifications on their own.

Notifying Social Security After a Death

Here are the steps to notify Social Security and apply for any benefits:

• Report the death to Social Security. In most cases, you won’t need to do this. But confirm they have been notified. If not, you can call or visit a local Social Security office.

• Apply for a one-time death benefit. If the deceased person was eligible, a spouse or child can apply for a $255 lump-sum death benefit.

• Check into survivor’s benefits. See if widow/widower or children’s benefits are available. The amounts depend on the deceased person’s earnings history.

• Return any benefit payments after death. Let Social Security know right away if checks were deposited after the death. These need to be returned.

• Notify Medicare. Social Security communicates with Medicare directly. But contact Medicare also to prevent fraud or errors.

Notifying the IRS After a Death

The IRS needs to be informed for tax purposes and to prevent potential fraud. Here’s what to do:

• File a final tax return. A final Form 1040 should be filed for the year of death. Include any unreported income up to the date of death.

• Notify the IRS directly if needed. Even if Social Security reported the death, check with the IRS. Provide the name, SSN, and date of death.

• Cancel dependents’ status. Remove the deceased as a dependent from your return. Update deductions like the child tax credit.

• Report IRA and 401(k) details. These need to be listed as income on beneficiaries’ tax returns. Follow required distribution rules.

• Close ITINs. If the deceased had an Individual Taxpayer Identification Number, notify the IRS to close this out.

• Update previous joint returns. Surviving spouses may need to refile jointly as “married filing separately” for prior tax years.

• Settle any outstanding debts. The IRS will want to resolve any pending balances due on the deceased person’s tax account.

Why Reporting Deaths Prevents Problems

Notifying government agencies accomplishes several important things:

• It avoids fraud if someone else tries to file taxes or claim benefits in the name of the deceased.

• It ensures proper payment of any benefits to qualified surviving family members.

• Taxes are filed accurately for the deceased’s final year.

• It closes out accounts like Social Security and IRS records to prevent errors.

• For Social Security, it safeguards the overall trust funds by ensuring only eligible recipients receive payments.

Taking these steps prevents identity theft and protects the loved one’s legacy. It also avoids issues or delays for the surviving family members.

How to Get Help with Notifications

Settling a loved one’s affairs can be complex. Here are some options if you need help with the notifications:

• Funeral homes are very familiar with the notification process. Ask them to assist.

• Contact the deceased’s accountant, tax preparer, or financial advisors for guidance.

• Attorneys who specialize in estate planning can help with taxes and benefits.

• Check if your local Area Agency on Aging offers assistance.

• See if any close friends or family have experience with this process.

With a few phone calls, you can rest assured that Social Security and the IRS are properly informed after a death. This helps protect identities, ensures accurate tax filings, and provides benefits to qualified family members. While grieving is hard enough on its own, take these steps to gain peace of mind and prevent further hassles down the road.