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I am ready to distribute the funds to the beneficiaries as…

I am ready to distribute...
I am ready to distribute the funds to the beneficiaries as the Executor of my mom's Estate. The Estate has no debts and no earned income (No Interest, No Investments etc..) only the following funds it received;
Reimbursement Check from AARP Hospitalization - $280
Inheritance Check from another Estate - $17,504.34 (My Mom had a Sister who died before her)
US Treasury Check (Social Security for Ins.) - $310.50
Teacher's Retirement Check - $6667.00
Gross Total Estate Funds - $24,761.84
I have 4 basic questions
Does the Estate owe or Do I pay or deduct any Federal Taxes or Arkansas State Taxes before distribution to the Beneficiaries?
Do I only provide Schedule K-1s to the Beneficiaries in 2018 when I file the Form 1041? Or do I have to provide 1099 R to each beneficiary also?
If 4 beneficiaries are minors do I have to have their Social Security Numbers and do they get Schedule K-1s?
If I using a fiscal year from Oct 2016 to Sept 2017 then the Tax year is still 2017 and reported by April 15, 2018 correct?
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Answered in 36 minutes by:
4/13/2017
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 14,894
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Hi. My name's Lane. I can help you here.

...

"Does the Estate owe or Do I pay or deduct any Federal Taxes or Arkansas State Taxes before distribution to the Beneficiaries?"

...

Not if you distribute the items of income (pension check, for example) out to the beneficiaries via the k-1. For items of income that would be taxable, either the estate or the beneficiaries pay the tax, not both.

...

It's typically best to let individuals pay (individuals don't hit the 39.6% tax bracket until their income is over 400,000. Trusts and estates hit the 39.6% bracket at a little over 12,000 of income.

...

"Do I only provide Schedule K-1s to the Beneficiaries in 2018 when I file the Form 1041? Or do I have to provide 1099 R to each beneficiary also?"

...

Yes in 2018, and no, the 1099-Rs would have come from any pension or qualified plans TO the individual beneficiaries OR to the estate if there was no beneficiary on file with the custodian. Income received from a decedent's IRA, qualified plan, or annuity is Income in Respect of a Decedent (IRD). This would be another item that you'd want to distribute out via the k-1 (taking the distribution deduction on the 1041) so that the individual beneficiaries are taxed (likely at lower rates AND becasue the income is split into smaller amounts for each beneficiary.

...

"If I using a fiscal year from Oct 2016 to Sept 2017 then the Tax year is still 2017 and reported by April 15, 2018 correct?"

...

For calendar year estates and trusts, file Form 1041 and Schedule(s) K-1 on or before April 2028. For fiscal year estates, file Form 1041 by the 15th day of the 4th month following the close of the tax year. For example, an estate that has a tax year that ends on June 30, 2018, must file Form 1041 by October 16, 2018. If the due date falls on a Saturday, Sunday, or legal holiday, file on the next business day.

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I hold a law degree, with concentration in Tax Law, Estate law & Corporate law, an MBA, with specialization in finance a BBA, and CFP & CRPS designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice, to clients on three continents since 1986.

Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 14,894
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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