| They say death and taxes are the only two things you | | | | deceased's beneficiaries. |
| can count on. Unfortunately, dying is taxable. Who | | | | After this is figured, it is the responsibility of the |
| would have thunk it? | | | | beneficiaries and the fiduciary to determine the amount |
| When a loved one passes away, responsibilities are | | | | that the beneficiaries should deduct from their personal |
| passed on to others. These individuals are considered | | | | taxes. Any money that they receive from the |
| the fiduciary and hold many responsibilities for the | | | | deceased is considered taxable income and should be |
| deceased. Tax preparation is no exception to these | | | | reported to the IRS at tax time. A Form 1041 must be |
| responsibilities. For legal purposes, the fiduciary is the | | | | filed for any deceased individual that had a gross |
| executor and the person in possession of the | | | | income for the tax year of six hundred dollars or more. |
| deceased person's estate. Income tax returns for | | | | If the estate is on soil foreign to the US, it is not |
| estates and trusts are outlined on Form1041. The form | | | | considered taxable and is subject to the countries |
| 1041 will be reported under the fiduciary's taxpayer | | | | specific laws. |
| identification number, not the deceased's TIN. The | | | | An IRD, which is any income in respect to the |
| fiduciary will complete Form 1041 and report to the IRS. | | | | descendant is also accounted for in Form 1041. Any |
| The form outlines the descendant's estate, trust or | | | | income that the deceased was due but had not been |
| bankruptcy estates. This executor of the estate is also | | | | collected is an IRD. This includes such things as interest |
| in charge of ensuring that any taxes owed are paid in | | | | on savings bonds and deferred salary payments. |
| full. | | | | These IRD's must be treated, for tax purposes, as |
| The form must be reported and includes many | | | | though the descendant had lived and received these |
| important details. Tax details such as information about | | | | monies. |
| income and estate liability are included on the form. | | | | Reporting information about the deceased estates is |
| Any income that is held for future beneficiaries and | | | | up to the fiduciary of the trust or will carrying out the |
| even the taxable wages for household help at the said | | | | duties of taxes. Including filling out the Form 1041, |
| estate must be reported on this form. After completing | | | | personal income taxes should also be carefully filed for |
| schedule B on Form 1041, the fiduciary will be able to | | | | the deceased. Unfortunately, they are not exempt |
| determine the deduction for distribution to the | | | | from tax laws. |