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Lev, Tax Advisor
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The previous question was incomplete. It was a 2012 tax form

Resolved Question:

The previous question was incomplete. It was a 2012 tax form to be file in
2013, and Tax dept wants us to use 1041 instead of 1040, the taxpayer
died in February 2013. Why do we have to use 1041? Please explain.
Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.

Lev :

Hi and welcome to Just Answer!
If the taxpayer dies - all income received by the taxpayer up to the day he/she passed away is reported on the final tax return of the decedent. Thus - if the taxpayer died on February 2013 - there will be a final tax return for the short year from Jan 1, 2013 to February 2013 and that return will be filed using form 1040. The income received before the death will be taxable on the decedent final return on form 1040. Write "DECEASED," the decedent's name, and the date of death across the top of the tax return.
The decedent's income includible on the final return is generally determined as if the person were still alive except that the taxable period is usually shorter because it ends on the date of death. You must attach Form 1310 to all returns and claims for refund - so refund checks will be issued with your name - www.irs.gov/pub/irs-pdf/f1310.pdf
The income received after she died is reported on the estate's income tax return - form 1041 - www.irs.gov/pub/irs-pdf/f1041.pdf

You will find more details and examples in IRS publication 559 - www.irs.gov/pub/irs-pdf/p559.pdf
The estate will report distributions to beneficiaries on form K-1 - www.irs.gov/pub/irs-pdf/f1041sk1.pdf - that form reports to beneficiaries taxable part of their distribution.

Lev :

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.

Expert:  Lev replied 1 year ago.

Just in case you were not able to use the chat - I am switching to Q&A mode and porting the answer below.
Please feel free to communicate if you need any clarification or have other tax related issues.

 

If the taxpayer dies - all income received by the taxpayer up to the day he/she passed away is reported on the final tax return of the decedent. Thus - if the taxpayer died on February 2013 - there will be a final tax return for the short year from Jan 1, 2013 to February 2013 and that return will be filed using form 1040. The income received before the death will be taxable on the decedent final return on form 1040. Write "DECEASED," the decedent's name, and the date of death across the top of the tax return.
The decedent's income includible on the final return is generally determined as if the person were still alive except that the taxable period is usually shorter because it ends on the date of death. You must attach Form 1310 to all returns and claims for refund - so refund checks will be issued with your name - www.irs.gov/pub/irs-pdf/f1310.pdf
The income received after she died is reported on the estate's income tax return - form 1041 - www.irs.gov/pub/irs-pdf/f1041.pdf

You will find more details and examples in IRS publication 559 - www.irs.gov/pub/irs-pdf/p559.pdf
The estate will report distributions to beneficiaries on form K-1 - www.irs.gov/pub/irs-pdf/f1041sk1.pdf - that form reports to beneficiaries taxable part of their distribution.

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.

Lev, Tax Advisor
Category: Tax
Satisfied Customers: 23168
Experience: Taxes, Immigration, Labor Relations
Lev and other Tax Specialists are ready to help you
Customer: replied 1 year ago.


Thank you for your response, our attorney here in Guam told us how to handle this problem. When I was inquiring on this subject, he was off island.


 


Your response helps.


 


Trini Lizama


 

Expert:  Lev replied 1 year ago.

As you are asking about 2012 tax return - you need to file for the decedent - it should be on the form 1040 because the decedent was alive on 12/31/2012 - not a Form 1041.
If your response to the IRS - you need to inform that because the decedent was alive on 12/31/2012 - the form 1040 was used.

 

After the taxpayer has died, any income received was deemed to have been paid to a trust holding the income-earning assets until they were distributed or disposed. You probably have a tax ID number automatically issued by the IRS. If not, you should apply for one.

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