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Bill
Bill, Enrolled Agent
Category: Tax
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Experience:  EA, CEBS - 35 years experience providing financial advice
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I am executor of my Dads Estate. He passed away in October

Resolved Question:

I am executor of my Dad's Estate. He passed away in October of 2008.
In addition to the executor's fee I am also receiving income for labor that was done in 2008. This labor was to make his house saleable.

I am planning on applying for Social Security in Jan, 2010.

Will the executor's fee be considered income by Social Security and reduce my benefits?

It does not look like I will receive any of the monies owed me until 2010.

Will Social Security look at this fee and income as earned in 2010? Can I claim it on my 2009 taxes?
Submitted: 7 years ago.
Category: Tax
Expert:  Bill replied 7 years ago.

The executor's fee will not be considered earned income from working for purposes of reducing your social security benefits because you are not in the business of providing professional executor services. However, it will be considered taxable income and should be reported on line 21 of Form 1040.

 

See section on "Personal Representatives" on page 32 - http://www.irs.gov/pub/irs-pdf/p525.pdf

 

Customer: replied 7 years ago.
It does not look like I will receive any of the monies owed me until 2010. Will Social Security look at this fee and income as earned in 2010? Can I claim it on my 2009 taxes?

Since this work was performed in 2008 even though I won't receive it until 2010, will it impact my social security benefits if I apply in 2010?

Expert:  Bill replied 7 years ago.

It won't effect your social security benefits with regards XXXXX XXXXX your benefits (due to the earnings test) because it is not considered earnings from working. However, because it will be added to income for the year, it may cause some of your social security benefits to become taxable.

 

http://ssa-custhelp.ssa.gov/cgi-bin/ssa.cfg/php/enduser/std_adp.php?p_faqid=277&p_created=958501496&p_sid=Qc32JsOj&p_a ccessibility=0&p_redirect=&p_lva=&p_sp=cF9zcmNoPTEmcF9zb3J0X2J5PSZwX2dyaWRzb3J0PSZwX3Jvd19jbnQ9MTMzLDEzMyZwX3Byb2RzPSZwX2NhdHM9MCZwX3B2PSZwX2N2PSZwX3NlYXJjaF90eXBlPWFuc3dlcnMuc2VhcmNoX25sJnBfcGFnZT0xJnBfc2VhcmNoX3RleHQ9ZWFybmluZ3MgdGVzdA**&p_li=&p_topview=1

 

Customer: replied 7 years ago.
I
Expert:  Bill replied 7 years ago.
Your question did not come through.
Customer: replied 7 years ago.

I am talking about the monies I am to receive for making his house saleable. This is approximately 400 hours at $25.00 per hours, or $10,000.00. I am only 63 years old and I have a seasonal job that pays me approximately $13,500.00 per year.

 

Since this work was performed in 2008 even though I won't receive it until 2010, will it impact my social security benefits if I apply in 2010? If so, can I send an invoice to the estate and treat this as income in the year earned? I need to start my SS benefits ASAP.

Expert:  Bill replied 7 years ago.
If you receive a 1099-MISC from the estate in 2010 and report the income as a sole-proprietor on Schedule C then it will be considered earned income and included with the $13,500 for the retirement earnings test. However, if you receive the 1099 from the estate in 2009 then it will not be included since the income will have been earned prior to receiving benefits next year. So for this reason you may want to consider issuing a 1099 to yourself this year.

Edited by Bill on 12/2/2009 at 10:59 PM EST
Customer: replied 7 years ago.

How would I issue myself an 1099-misc? Do I need to submit an invoice to the estate?

Do I and the IRS consider this as income as of the date of the invoice?

You said " you may want to consider issuing a 1099 to yourself". Why just consider it?

Is a legal issue involved?

Expert:  Bill replied 7 years ago.

The estate would issue a 1099-MISC to you for the work you did and received payment for. The estate would issue the 1099 in the year that you actually receive payment.

 

The estate should maintain some records documenting your hours of work. The IRS considers the payments to you as income in the year that you receive payment.

 

I stated consider issuing a 1099 this year (and assuming you receive the payments this year) meaning instead of next year so that it is considered income this year rather than next year for the retirement test.

 

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