All Things Tax

All Things Tax

Like the title says, from the filing process and tax questions to tax policy and reform, you can search and share All Things Tax here. This is the place to find answers to all your general questions that don't fall under the other categories. And just a reminder: questions about software or online filing should be posted in DIY Products.

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Pioneer
Posts: 2
Registered: ‎03-07-2018
Accepted Solution

Estate and 1041 income

My father passed away in December 2017.  I filed his last individual return with no problem.  His only assets were a checking and two savings accounts w/ his credit union.  There was a death benefit payable to his estate ($10,000).  Is that $10k considered reportable income to the estate?  The only other income to the estate will be less than $500 interest on his bank accounts.

Will I even need to file a 1041 under these circumstances?

Associate (Pioneer)
Posts: 253
Registered: ‎01-08-2018

Re: Estate and 1041 income

Hello srogers1094,

 

According to the tax rules, a Form 1041 must be filed to report any income that is either accumulated or held for future distribution to beneficiaries. Also, according to IRS publication 559, every domestic estate with gross income of $600 or more during a tax year must file a Form 1041.

 

Due to the fact that the interest income on the decedent’s bank accounts is below $500, a Form 1041 may not have to be filed. However, the Form 1041 can be filed just to show how much income was earned by the decedent after the date of death.

 

According to the instructions for Form 1041, it lists examples of tax-exempt income. One of those tax-exempt income includes death benefits. Therefore, the death benefit payable to the estate is considered as tax-exempt income or nontaxable income.

 

Therefore, in that case, the only item to be reported on this Form 1041 would be the interest income on decedent’s bank accounts.

 

Regards,

 

Lawrence

Tax Research Specialist

Pioneer
Posts: 2
Registered: ‎03-07-2018

Re: Estate and 1041 income

Thank  you!