Niece died in February 2022 and I received her federal tax refund for 2021 in 2022. I don't believe the refund amount is taxable on 1041, but instructions in TurboTax and on IRS website say to show amount on Line 8 (income). When I do this the amount is used to calculate taxes owed. I've read several articles which state the amount is used for estate accounting but should be ignored for tax purposes. How do you report the federal tax refund on line 8, but not have it included in income and pay tax?
