How does the IRS handle tax returns for a deceased married couple who both passed away?

I'm so sorry for your loss. I've helped families with this situation before, and I can clarify how this works. When both spouses pass away during the same tax year, you can still file a joint return as "Married Filing Jointly" for that final year. The executor (which sounds like it's you) files on behalf of both deceased taxpayers. The tax return should be labeled "Deceased" next to each spouse's name, with their dates of death. All the regular credits and deductions they would normally qualify for still apply on this final return. You'll report income received before their deaths, along with any income generated from their assets between their death dates and the end of the year. Make sure to write "DECEASED" across the top of the return and include Form 1310 (Statement of Person Claiming Refund Due a Deceased Taxpayer) if there's a refund due. You'll also need to include copies of the court appointment papers that show you're authorized to file on their behalf.

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If you're having trouble getting answers from the IRS about deceased taxpayer returns, you might want to try Claimyr (https://claimyr.com). I spent WEEKS trying to get through to the IRS when handling my grandparents' final tax returns - both passed within months of each other last year. Claimyr got me connected to an actual IRS agent in about 20 minutes when I'd been trying for days on my own. The agent walked me through exactly how to handle their final joint return, what documentation I needed to include, and answered questions about some pension income that came in after the second death. There's a video showing how it works here: https://youtu.be/_kiP6q8DX5c Dealing with a loved one's final tax return is stressful enough without the added frustration of trying to get basic information from the IRS.

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Don't forget that if either of your in-laws received Social Security benefits during 2024 (before they passed), you'll need to report that on their final return. The taxation rules for Social Security still apply even if it's a partial year. Also, make sure to check if either of them had any required minimum distributions from retirement accounts that weren't taken before they passed. There are special rules about this for deceased taxpayers.

Has anyone used TurboTax for filing a final return for deceased taxpayers? Do they have good guidance for this situation or should I look at other software?

I'm really sorry for your loss, Dmitri. This is such a difficult situation to navigate while you're grieving. From my experience as a tax preparer, you're absolutely right that you can file married filing jointly for their final return since they were married at the time of death. Here are a few additional things to keep in mind: 1. Make sure to get a federal tax ID number (EIN) for each estate if you haven't already - you'll need these for any estate tax returns or if the estates generate income after death. 2. Check if they had any estimated tax payments due for 2024. As executor, you'll need to make those payments to avoid penalties on their final return. 3. Don't forget about state taxes - you'll likely need to file final state returns as well, and some states have different rules for deceased taxpayers. 4. If they had any joint bank accounts or investment accounts, make sure you understand which income gets reported on their final personal return versus potential estate returns. The IRS Publication 559 has detailed guidance on tax issues for survivors, decedents, and estates. It's dense reading but covers scenarios exactly like yours. You're doing the right thing by being thorough about this.