Is there an accountant in the house?

[todd2000]

Im just a little confused, and was hoping someone here would be more knowledgeable than me. I usually do my own taxes, but there are 2 things this year that are a little confusing. My mother passed away in Oct of 05, and I received some money from her estate (bank account, car etc...). As far as I can tell from searching online I do not have to pay taxes, on this inheritance because it is less than 1.5 million, at least if I understand this site correctly http://www.nolo.com/article.cfm/obj.../126/FAQ/#60F22CD5-3C3C-416D-8087995E8ED55616 . Is this correct? is there anything special I need to do? Also I received money from her life insurance, do I just list the total from the 1099 form (which I still haven't received) with the. Wages, salaries, tips etc on line 7 of the 1040 form, or should I list it els-ware? If so where? Thanks for the help, I figured there must be an accountant or 2 on MR

 

[todd2000]

mabye not...

 

[igucl]

I'm in school to be one, and should be able to help you, but, alas, it's bed time and I'm too lazy to open my tax book. Maybe tomorrow.

 

[Deepdale]

Im just a little confused ...

First things first ... I am sorry for the loss of your mother. If the requirement for filing an estate tax return (Form 706) on behalf of the decedent is not met, then you are under no obligation to do so. Keep in mind that even when there is no technical requirement or tax due since decedent's estate is less than 1.5 million for dates of death occuring in 2005, some advocate filing in order to show the respective assets and expenses/debts.

There is a reason why Form 1099 was not issued for life insurance proceeds you already received ... it is not taxable (unless the policy was turned over to you for a price). Thus, it will not be added to wages or shown elsewhere on Form 1040. The same holds true for money received from her bank account and the car. I recommend you look at IRS Pub. 559 from one of the supplied links below. It deals with executors, survivors and beneficiaries.

http://www.irs.gov/publications/p525/ar02.html#d0e5003

http://www.wwwebtax.com/irs/irs_publications_list.htm

 

[todd2000]

First things first ... I am sorry for the loss of your mother. If the requirement for filing an estate tax return (Form 706) on behalf of the decedent is not met, then you are under no obligation to do so. Keep in mind that even when there is no technical requirement or tax due since decedent's estate is less than 1.5 million for dates of death occuring in 2005, some advocate filing in order to show the respective assets and expenses/debts.

There is a reason why Form 1099 was not issued for life insurance proceeds you already received ... it is not taxable (unless the policy was turned over to you for a price). Thus, it will not be added to wages or shown elsewhere on Form 1040. The same holds true for money received from her bank account and the car. I recommend you look at IRS Pub. 559 from one of the supplied links below. It deals with executors, survivors and beneficiaries.

http://www.irs.gov/publications/p525/ar02.html#d0e5003

http://www.wwwebtax.com/irs/irs_publications_list.htm

Thank you. If I understand you correctly I can just file my taxes as I normally would, and basically ignore the life insurance, and money from bank account, and car? The only reason I was expection a 1099 was because I got a letter with the life insurance check that says

"Pursuant to the provisions of Public Law 104-188, effective August 21, 1996, the sum of money represented by the enclosed check is subject to federal income tax and as such it is necessary for us to report payment of this money to the Internal Revenue Service on form 1099 which will be issued next January. You should contact your tax advisor regarding how this amount should be treated on your tax return"

But I guess they just said that bacause they still have to report it to the IRS, and if the IRS doesn't consider it taxable then I don't get the 1099 form right?

 

[todd2000]

Also the thought just dawned on me after reading one page. Do I have to file any State, or Federal tax returns for my mother since she worked for part of 2005?

 

[Deepdale]

Thank you. If I understand you correctly I can just file my taxes as I normally would, and basically ignore the life insurance, and money from bank account, and car?

File as you typically would. BTW, when it comes to situations such as yours, it is always a sound idea to present the facts and circumstances to a person experienced in dealing with a decedent. There can be unusual cases in which life insurance is taxable, but in the overwhelming number of cases there is no taxable consequence. Companies that issue checks to recipients enclose the basic form letter to comply with the law in effect.

In your subsequent post you mentioned income earned by your mother in 2005 ... final personal tax returns (federal and state) need to be filed on her behalf.

 

[todd2000]

File as you typically would. BTW, when it comes to situations such as yours, it is always a sound idea to present the facts and circumstances to a person experienced in dealing with a decedent. There can be unusual cases in which life insurance is taxable, but in the overwhelming number of cases there is no taxable consequence. Companies that issue checks to recipients enclose the basic form letter to comply with the law in effect.

In your subsequent post you mentioned income earned by your mother in 2005 ... final personal tax returns (federal and state) need to be filed on her behalf.

Well I just went to the local IRS office, and they verified everything I thought. Just one last question,

 

[todd2000]

sorry nevermind Thanks for your help.

 

[Deepdale]

Thanks for your help.

I am glad to have been of some assistance.

 

[todd2000]

I am glad to have been of some assistance.

Yeah I just filed my tazes yesterday, now I have to figure out how im gonna file my mothers. I have to call where she used to work tommorrow, and hope they will send me a copy of her W-2. Luckly I worked there for a few years too so I know people . Just out of curiousity should I put my address on the refund even though thats not where she lived? Otherwise how am I going to get the refund? I moved to VA after she passed, and now have a different address.

 

[Deepdale]

... Just out of curiousity should I put my address on the refund even though thats not where she lived? Otherwise how am I going to get the refund? I moved to VA after she passed, and now have a different address.

You must enter your address or else any refund will be undeliverable. Should that happen, it takes time for the original check to be redeposited to decedent's account, where it will remain indefinitely until an address change is made and a subsequent check scheduled for refund. That is a process definitely worthy of avoiding.

When you file a return for a decedent as the personal representative (or surviving spouse), you should write "DECEASED," the decedent's name, and DOD xx-xx-xx (denotes date of death) across the top of the tax return.

If a personal representative has been appointed, that person must sign the return. If no such person has been appointed and if there is no surviving spouse, the person in charge of decedent's property must file and sign the return as "personal representative."

Generally, a person who is filing a return for a decedent and claiming a refund due that person must file Form 1310 - Statement of Person Claiming Refund Due a Deceased Taxpayer - with the decedent's final return.

Since I do not have the instruction booklet accessible, check the table of contents and review what it says about filing on behalf of a decedent and it should mirror what was outlined here on your behalf. Once you have the papers together, you might want to make another quick visit to the IRS Taxpayer Assistance area and have someone give it a final look before mailing it or leaving it with them for submission. Make sure you have a few copy sets for your records.

 

[todd2000]

Ok so I was reading the 1040A Instructins and they say "If you are a court appointed representative, file the return and attach a copy of the certificate that shows your appointment. All other filers requesting the deceased taxpayer'ss refund must file the return and attach form 1310"

It says "A personal representative may be, an Exacutor, administrator, or anyone who is in charge of the deceased tax payers property"

I have an "Affidavit of Heir" from the court, that says

"I, Todd Sullivan residing at ___________________ being duly sworn according to law, on oath depose and say that said deceased __________, departed this life without leaving a will on or about Oct 25th 2005 having resided at ___________, county of Passaic state of NJ; that the following are Heirs at law of said deceased"

Then it lists me as heir, and gos on to list all of here property (bank account, car etc..) that I am entitled to. Does this count as a certificate that shows I am a court apointed representative, or do i still have to file form 1310? Thanks for all your help deepdale, I get really nervous that im gonna mess this stuff up and the IRS is going to come after me

 

[todd2000]

Well It just occurred to me I guess it couldn't hurt to attach a copy of the court certificate, AND fill out a 1310 form just to be safe. Thats probably what I'll end up doing. That should cover all bases.

 

[Kwyjibo]

you know, this might be a year to get some real life professional help, with things liek this I'd rather be right this year than pay for mistakes down the road.

 

[Deepdale]

Well It just occurred to me I guess it couldn't hurt to attach a copy of the court certificate, AND fill out a 1310 form just to be safe. Thats probably what I'll end up doing. That should cover all bases.

The "Affidavit of Heir" that you quoted from makes you a court appointed representative. However, I agree that Form 1310 should be completed and sent along with the final Form 1040 filed for your mother. The reason it is better to enclose more rather than less is because your mother died intestate (without a will). Considering you decided to forego professional assistance, you are doing things properly ... I seriously doubt anybody will be going after you.

you know, this might be a year to get some real life professional help, with things like this I'd rather be right this year than pay for mistakes down the road.

For others who may face similar situations, it is always wise to seek assistance when you feel something is beyond your ability to deal with it. Todd's case is rather straightforward, but as I mentioned in post # 7, the tax aspect involving decedent's can be very complex, thus making the price paid for help seem like a real bargain.

Added info: I looked at Form 1310 and it states that for purposes of this form, "a personal representative is the executor or administrator of the decedent's estate, as appointed or certified by the court. A copy of the decedent's will cannot be accepted as evidence that you are the personal representative."

It is known that your mother did not leave a will, so I would just verify with the court that your document is indeed equivalent to being named as the personal representative. When an estate is quite small, the courts do have more informal procedures for survivors when decedent's die intestate.

Even if a person filed Form 1310 as someone other than either a surviving spouse or court-appointed or certified personal representative, that party would then check Box C in Part 1 of Form 1310 and answer the questions that follow in Part II.

http://publish.no.irs.gov/FORMS/PUBLIC/PDF/11566K05.PDF