Tax

Have a Tax Question? Ask a Tax Expert

Ask an Expert,
Get an Answer ASAP!

Tax
This answer was rated:

My father died in 2002. His estate earned interest on life

My father died in 2002...
My father died in 2002. His estate earned interest on life insurance proceeds that were delayed in being paid out. The estate filed a federal & state return for that interest. The funds were then distributed to me, his daughter (I assume I am a class A beneficiary). Are those distributed funds (over $10,000) taxable to me? If so, are the funds taxed as income or interest?
Show More
Show Less
Ask Your Own Tax Question
Answered in 8 minutes by:
8/21/2012
Chea Romine
Chea Romine, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 197
Experience: CPA, Managing Partner of medium sized CPA firm specializing in all areas of tax and accounting.
Verified

Chea Romine :

The basic rule of thumb is make sure someone paid tax on the interest, but you only have to pay tax once. So if the estate paid the tax on the interest then as a beneficiary there is no tax to be paid. Life insurance is not taxable to the estate or beneficiary. So if I am reading it correctly you will have no tax due and will not need to report anything on your tax return.

Customer:

Alright, that was my understanding as well. However, the IRS has just sent me a tax bill as an individual for the interest that was earned by the estate and ultimately distributed to me. I will, based on your response, challenge that decision...is there some guidance you can provide concerning my challenging their decision?

Chea Romine :

Do you have the 1099 that the interest was reported on? If so who's social security number is XXXXX it?


 


 

Customer:

No, when I filed the supplemental 1041 Estate return (I was the executrix) I completed the schedule K-1, which did reflect MY social security number. By the by, the Estate filed the return for the additional interest and then the IRS refunded it back to the estate saying nothing was due. Now, as I said, I have received a tax bill as an individual for the interest reported on the Estate return K-1.

Customer:

The K-1, part 3, section 1 (interest income) was completed, but I did not take an eState tax deduction (secion 10), should I have done that? Or filled part 3 in a different manner?

Chea Romine :

To your second point. The interest was ok to be reported on the K-1, part 3 Box 1, what that means is you are choosing to claim the interest on your personal return. So if that is how you prepared the K-1 that is fine and you then list the interest on your personal return and pay the tax personally.

They are correct nothing was due at the estate level the tax is due at the personal level. What I was saying first is the tax just must be paid somewhere and it hasn't been paid by the estate so you will need to pay it on the personal side.


 

Chea Romine :

Depending on all the facts it might be cheaper to pay tax at the personal level so the way you did it might have been best.


 

Customer:

Wouldn't it be a lower tax rate if the Estate paid the tax? Keeping in mind the Estate tried to pay the tax through the amended return, but then the IRS said no tax was due...it confuses me that they want the $$ from me as an individual when the Estate wanted to pay, but they refunded it...

Customer:

Wait, I just saw the second part of your answer, so ignore my f/u with etstae vs personal tax liability. Thank you for your help!

Chea Romine
Chea Romine, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 197
Experience: CPA, Managing Partner of medium sized CPA firm specializing in all areas of tax and accounting.
Verified
Chea Romine and 87 other Tax Specialists are ready to help you
Ask your own question now
Ask Chea Romine Your Own Question
Chea Romine
Chea Romine
Chea Romine, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 197
197 Satisfied Customers
Experience: CPA, Managing Partner of medium sized CPA firm specializing in all areas of tax and accounting.

Chea Romine is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,300 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,338 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

Robin D.

Robin D.

Senior Tax Advisor 4

13,980 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,651 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

R. Klein, EA

R. Klein, EA

Enrolled Agent

1,839 satisfied customers

Over 20 Years experience

< Previous | Next >

Related Tax Questions
A CPA prepared a filed a personal return last april. There
A CPA prepared a filed a personal return last april. There was a NYS and NYC refund due. The check never was received. The CPA is not helping procure a replacement check, whom should the person call o… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
My mother died in Illinois. On the federal estate tax return
My mother died in Illinois. On the federal estate tax return she has 3.9 million adjusted gross estate and 1.5 million in taxable gifts made in 2010 and 1.7 million in unused exemption from my father'… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
Are there any tax implications either state or federal for a
Hello are there any tax implications either state or federal for a family member giving another family member a loan. Are there any documents that need to be in order besides a contract?… read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,083 satisfied customers
My boss personally lended an individual 100000 and the
My boss personally lended an individual 100000 and the balance is now 82000, the person he landed this money to has stopped making payments, how can he claim this on his taxes and what tax from should… read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,980 satisfied customers
Is income from an LLC passed through to personal tax return
Is income from an LLC passed through to personal tax return considered earned income, enabling me to contribute to a traditional IRA?… read more
abci168
abci168
Principal
27 satisfied customers
I haven't filed a personal return since 2011 tax year. In
Hello. I haven't filed a personal return since 2011 tax year. In 2013, I moved overseas, and didn't return till 2016. Can I just file my back taxes, or must I consult with tax attorney first for any i… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
I lost my refund check for an amended return and want to
I lost my refund check for an amended return and want to know if it could be canceled and a new check sent to me. It may have been stolen out of my purse. … read more
Shan-Nel Simmons
Shan-Nel Simmons
Tax Professional/Owner
Master\u0027s Degree
29 satisfied customers
Personal Estimated Federal Tax/Illinois payment: My federal
Personal Estimated Federal Tax/Illinois payment:My federal and IL taxes deducted on regular basis from pay check as employee. But I have S corp for which I know rough profit at 4th quarter since my ve… read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,083 satisfied customers
Is the interest one pays on a personal loan a tax deduction?
Is the interest one pays on a personal loan a tax deduction? … read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,798 satisfied customers
Impact of tax changes on filing amended returns... Client
Impact of tax changes on filing amended returns... Client filed a 2016 tax return on time in 2017. If the tax laws change significantly, which laws apply when amended returns are filed... the tax laws… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,798 satisfied customers
Two questions on federal tax deductibility: 1. We personally
Two questions on federal tax deductibility: 1. We personally paid legal fees for our manufacturer C Corp. The fees were for assistance in preparing a Research & Development tax credit application. Can… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Can a taxpayer file an amended return to elect into the
Can a taxpayer file an amended return to elect into the installment method if the original return was filed error without the installment method.… read more
PDtax
PDtax
Owner
Master\u0027s Degree
1 satisfied customers
What would the federal and state tax rate percentages be for
What would the federal and state tax rate percentages be for a $7700 IRA early withdrawal in Ohio?… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,798 satisfied customers
I am finalizing a personal tax return and my client has 8 or
I am finalizing a personal tax return and my client has 8 or 9 K-1 forms from operating companies that he owns. One company that i do not prepare issued a K-1 with a line 1 income of $242,089 and a se… read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,083 satisfied customers
Income from federal return incorrectly transferred to state
income from federal return incorrectly transferred to state return … read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,798 satisfied customers
If an estate received a Schedule K-1 in 2016 but no income
If an estate received a Schedule K-1 in 2016 but no income until 2017, do I file a estate tax return (Form 1041) for 2016 as the personal representative / administrator of the estate?… read more
keeperumiami
keeperumiami
Sr Financial & Tax Consultant
Bachelor\u0027s Degree
1 satisfied customers
I have a schedule K-1 Beneficiary's share of income,
I have a schedule K-1 Beneficiary's share of income, Deductions, Credits, etc. Line 5 shows 31,171, line 14 code E shows 1092, line 14H shows -30186. Do I owe tax on 31171 or just 1092. … read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
Can amended returns be filed for an individual or person who
Can amended returns be filed for an individual or person who is currently deceased using 1040X? … read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x