Tag Archives: Estate Income Tax

Don’t Confuse Avoiding Probate with Avoiding Estate Taxes

26 Monday Sep 2016

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avoiding estate taxesWhen planning your estate, it’s important to understand that avoiding probate does not eliminate or reduce estate taxes. Although avoiding probate may reduce or eliminate estate income taxes, avoiding probate doesn’t have any effect on estate taxes. In fact, avoiding probate and avoiding estate taxes are two unrelated concepts. The following is an overview of the two concepts:

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Tips to Minimize the Estate Income Tax

28 Thursday Apr 2016

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Filing the Estate Income Tax ReturnFiling the estate income tax return is a complex undertaking for the common executor. Fortunately, at the federal level, the executor must file the estate income tax return only if the earned income after death reaches $600.00 or more. So, with proper planning, you could minimize the income earned by the estate after death and possibly avoid the estate income tax entirely.

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Estate Income Tax Rates and your Estate Plan

02 Saturday Apr 2016

Posted by in Taxes

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Estate Income Tax RatesThe structure of the estate income tax rates are similar to the individual tax rates. The difference is that the estate income tax brackets are much more compressed than the individual income tax brackets. As a result, the estate will pay a higher tax on lower estate income levels because of the compressed estate income tax rates.

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How an Executor Distributes 1099 Income as a Nominee

22 Tuesday Mar 2016

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Form 1099 for NomineeAn executor becomes a nominee when the estate receives a 1099 showing income for the entire year and a part of that income belongs to other parties. In the article How to Report 1099 Income on the Final Return, the “Nominee Distribution” represents the earned income after death. Therefore, excluding the nominee distribution from the final return becomes necessary because that income goes to the estate or to the beneficiaries. As a result, the executor becomes the nominee and must distribute the income labelled nominee distribution to the rightful owners. Otherwise, the executor will face fines for non compliance.
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Track the Estate Income

01 Monday Feb 2016

Posted by in Record Keeping

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track the estate income

An important task for an executor is to track the estate income. Earned income from the decedent’s assets doesn’t stop earning income at the date of death. Therefore, as detailed in the article Tax Returns and the Date of Death, if earned income from estate assets reaches an income threshold, taxes will result. So, for proper income reporting, the executor needs to track the estate income from the date of the death.

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Tax Returns and the Date of Death

26 Saturday Dec 2015

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tax returns

An important function of the executor is to file tax returns for the decedent and the estate. Therefore, it is also important that the executor understands how the date of death determines which tax return to file. Income received before the date of death and after the date of death require different treatment. As a result, the executor must track the estate income accurately as depicted in the article Track the Estate Income. 

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