Discussion:Federal Tax Form 1041

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Discussion Forum Index --> Tax Questions --> Federal Tax Form 1041


Svictor (talk|edits) said:

21 January 2007
My Grandmother passed away in Oct 2005. She was in a nursing home and had a total of $4,000 in her account at the home. The nursing home advised my mother to obtain a federal tax id # for the Estate before they would issue her the check. My mother did that and opened a bank account in the Estates name. She was told she could not touch that money for 7 months. In August of 2006 she withdrew that money and closed the account.

When she got the federal id #, the letter from the IRS stated that she must file Form 1041 by 4/15/07. How does she treat the $4,000 on the form 1041? Is it Other Income? We read through the instructions for the Form 1041 and it seems that we should only have to claim income that was earned on the assets. Since the $4,000 was already in existance and there was no income made off the $4,000 do we have to claim anything? There was no other income or assets, only the $4,000. Your advice/comments would be greatly appreciated. I plan to try and contact the IRS tomorrow to see how we are suppose to treat the $4,000. Thanks.

Dennis (talk|edits) said:

22 January 2007
Seven months is a probate standard. You can just tell the IRS Not Required to File and they will leave you alone. There may be some deductible administation expenses but it doesn't sound like anything you want to bother with. Condolences.

Svictor (talk|edits) said:

22 January 2007
Thanks. They had my mother running all around because of this $4,000 and she's so nervous she'll have to pay most of it back in taxes. It's amazing, it was my gram's money and they put you through the ringer to get it.

Bottom Line (talk|edits) said:

22 January 2007
You're lucky Medicaid didn't take it.

Deback (talk|edits) said:

January 22, 2007
Svictor - It's the same when someone dies and has cash or CDs in the bank, etc. That cash is not taxable to the beneficiaries. Only the income earned by the decedent that hasn't been taxed yet is taxable to the beneficiaries.

Death&Taxes (talk|edits) said:

22 January 2007
Inherited money is taxable is in my top five of erroneous taxpayer ideas, along with gifts are taxable.

TLnAustin (talk|edits) said:

22 January 2007
Gifts are not taxable - the only inherited money that is . . .Trad IRA's or that is what we have been told - tl

Kevinh5 (talk|edits) said:

22 January 2007
Don't ever forget about IRD! Taxable taxable taxable.

Mark Eason (talk|edits) said:

22 January 2007
Death&Taxes, One of my top five erroneous taxpayer ideas, gifts to family members are not taxable and there is no such thing as a gift tax return. Yes, most gifts are not taxable at the Fed level but a return is due. Also, states do tax gifts. TN is one of the worst.

Death&Taxes (talk|edits) said:

22 January 2007
I was referring to so many recipients who walk in and say, 'we got $24,000 from Bill's parents. Do we have to pay tax on it?' In PA it only affect your eligibility for tax forgiveness, as do inheritances if I recall, but it is not taxable unless, as Kevin points out, it is IRD, but then there usually is a 1099R, or in case of estate income, a K-1. Other top five: 3. charity deduction for personal services over and above the expense of doing so, 4.lost rent for vacancies in rental properties (or bad debts for cash basis businesses) and 5. that there is still income averaging.

Drpcpa (talk|edits) said:

23 January 2007
There still is income averaging....... for farmers.

Death&Taxes (talk|edits) said:

23 January 2007
Touche :)

Kevinh5 (talk|edits) said:

23 January 2007
By the exceptions ye shall know the rules.

Death&Taxes (talk|edits) said:

23 January 2007
Those people who think regular income averaging still exists also list political contributions, interest on credit cards and auto loans, all in non-business circumstances. Maybe they're smart; after all, sales tax has come back from the dead for some people, and moving expense has gone from front page to Sch A and back to front page. Can the gas, cigarette and liquor tax be next to be exhumed?

Deback (talk|edits) said:

January 23, 2007
Political contributions can still be deducted on the Michigan return--maximums are $50 single and $100 joint at a tax savings of 3.9%.

Death&Taxes (talk|edits) said:

23 January 2007
Maybe so many New Jersey hacks wouldn't be headed for the slammer [the Mayors of Keyport and Brick are the latest] if we had such a deduction. Oh yea, and maybe pigs would fly.

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