My mother passed away in March. She had a revocable trust with me as the successor trustee. Only her home and three CDs were placed in the trust. CDs outside the trust were POD for her three children. She had no debts. All assets avoided probate. For filing an inheritance return in PA as the trustee, I assume I am only responsible for reporting the assets in the trust and paying the taxes from the CDs in the trust. I assume the CDs outside the trust are not my responsibility, except for the ones I received. For those CDs, I would pay taxes to the recorder of wills via a recently received Tax Notice, avoiding another tax return. Am I correct?
State/Country relating to question: Pennsylvania
Talked with Recorder of Wills and PA Dept of Revenue. Their answers were vague.
Hi and welcome to Just Answer!Your assumptions are correct - as the trustee - you are only responsible for reporting the assets in the trust and paying the taxes from the CDs in the trust.However if you are in additional to being a trustee - also you are a personal representative - you would be responsible for all inherited assets and for filing your mother's final tax return.Assuming the trust will be dissolved - taxable income will be passed to beneficiaries.
Yes I understand I am responsible for her income taxes as well. My question was directed only at filing the Inheritance Tax Return.
Again, it appears that each beneficiary of the assets outside the trust is responsible for paying his or her own inheritance taxes and filing their own return..Correct?
The Inheritance Tax Return should include all assets - not only taxable income and not only those listed in the trust.For income tax purposes - your undestanding is correct. What you have to include is an income in respect of a decedent (IRD).Income in respect of a decedent realized AFTER the death is taxable.. Income in respect of the decedent is gross income that the decedent would have received had death not occurred and that was not properly includible in the decedent's final income tax return. Income in respect of a decedent must be included in the income of one of the following.--The decedent's estate, if the estate receives it.--The beneficiary, if the right to income is passed directly to the beneficiary and the beneficiary receives it.--Any person to whom the estate properly distributes the right to receive it.
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