topic Are executor expenses treated as income? in Get your taxes done using TurboTax

Are executor expenses treated as income?

fpc — Sun, 25 Aug 2019 21:04:45 GMT

I know where on my 1040 to enter the executor fees I am being paid as an executor for a friend's estate. But where do I enter the expenses I am being reimbursed for such as mileage and various supplies? Would the reimbursed amount for expenses be considered income just as the executor fee is?

Re: Are executor expenses treated as income?

Carl — Sun, 25 Aug 2019 21:08:36 GMT

It's all taxable income to the executor. As executor you don't get to claim anything such as mileage and the such. Anything you're "reimbursed" for is part of your taxable executor income and is reported as such.

Re: Are executor expenses treated as income?

Critter — Sun, 25 Aug 2019 21:11:19 GMT

The estate should only report your executor fee on a 1099 and that is all you need to report on the tax return. Reimbursed expenses that you give the estate a detailed report are deducted on the estate return not yours.

Re: Are executor expenses treated as income?

fpc — Sun, 25 Aug 2019 22:37:18 GMT

Thank you. I'll just enter my expenses and my compensation as two separate entries and show both as regular income on my 1040.

Re: Are executor expenses treated as income?

Critter — Sun, 25 Aug 2019 23:09:09 GMT

NO ...you do NOT enter the expenses or the reimbursement on YOUR income tax return since is it neither income or an expense. The estate will deduct the expense since it reimbursed you for it so it is THEIR expenses to deduct not yours.

Re: Are executor expenses treated as income?

fpc — Mon, 26 Aug 2019 00:33:50 GMT

Thank you @Critter Critter for your patience.

I need to make sure you understand that I am asking about personal compensation I am receiving as an executor. It seems you are saying the compensation I receive is to be considered to be reimbursement. I do receive reimbursement for car usage, for example. But the compensation I receive is payment for my labor. Shouldn't income from that labor be declared on my 1040 as income?

I've always read that: "Under federal tax laws, executor's fees are taxable income. How you declare these fees as income and how they are taxed depends on whether you are in the business of being an executor." I am not in the business of being an executor. I am handling the estate for a friend.

From other answers here, I assumed that the actual expenses I incur are also to be handled as income.

I assume my compensation and my expenses would be treated as expenses on the 1041 estate form when it is filed.

Please correct my misunderstanding.

Thank you

Re: Are executor expenses treated as income?

pk — Mon, 26 Aug 2019 03:08:01 GMT

@fpc , agree with @Critter that

for the estate return --- your compensation and the reimbursements ( for necessary and customary expenses solely associated with the effort of administering the estate ) are expenses to the Estate and reported on form 1041. I am assuming here that the Estate required you to provide adequate proof of the expenses that you as an executor claimed.

For your individual return, the compensation is a taxable income ( generally as "other " since you are not in the business of managing Estates ). The reimbursements are really making you whole i.e. reimbursing expenses that you incurred and generally should not be treated as an income . That is my general stance on this . However, I do agree that this could be a sticky wicket depending on exactly which expenses are being reimbursed and what rate.

Re: Are executor expenses treated as income?

fpc — Mon, 26 Aug 2019 14:20:49 GMT

Thank you for the advice!

The expenses I have incurred are buying pre-printed checks, envelopes, post office certifications for mailings, stamps, and mileage @ $.58/mile. I do save all receipts and log all mileage. I agree that the reimbursement from the trust just makes me whole. And I didn't think that should be income. But I'm not sure whether or where it should be entered on my 1040. I understand it would be entered on the 1041.

I agree the compensation I receive for labor is income and I know where to enter it in TT and on the 1040.

The trust that governs me, states "reasonable compensation and expenses". Nothing is specified regarding the keeping of records, whether for compensation or expenses.

So, assuming that all makes sense, my questions would be whether $.58/mile is reasonable, whether and where would I enter expenses on my return, and what is "reasonable compensation" in Kansas for an estate that is valued close to a million $. The only people I have paid include Estate Sales company and real estate agent. I have written and recorded all quit claim deeds and bill of sales for vehicles. I handle all of the accounts, write and distribute checks. And I have done some minor house repairs. I will use TT to complete the decedent's 1040 and the estate's 1041.

Thank you for your help!

Re: Are executor expenses treated as income?

rwwmpm100 — Sat, 11 Apr 2020 01:24:20 GMT

I was the executor of my mothers estate.

I received a 1099 Misc for non employee compensation. Can I deduct my expenses for being executor. IE mileage, other travel expense to reduce this income. I wasn't paid by the estate for these expenses.

Let me know

Thanks!

Re: Are executor expenses treated as income?

pk — Sat, 11 Apr 2020 03:39:49 GMT

@rwwmpm100 , while I generally agree that the income for providing the service ( as an executor ) needs to be recognized and required / customary expenses used to offset the income on a schedule-C, I am not clear about the 1099-MISC. If the 1099-MISC is issued by the estate or by one of the beneficiaries , to you it is your income. You can also show this as income for the Estate and then expense it from the Estate -- no matter how it gets to your hands , it is still your income and must be recognized and reported on schedule -C

Does this make sense or am I missing your situation?

Re: Are executor expenses treated as income?

fanfare — Sat, 11 Apr 2020 13:40:24 GMT

Your executor compensation is Ordinary Other Income.

1040 Schedule 1 Line 8.

No Schedule C.

If the attorney is doing the calculation and paying you, the amount should appear in 1099-MISC Box 3.

Re: Are executor expenses treated as income?

pk — Sat, 11 Apr 2020 18:46:08 GMT

@fanfare , you are correct --- ( this is not his business and the 1099-misc box makes a difference in the category of the income ) -- my error

Re: Are executor expenses treated as income?

rwwmpm100 — Sat, 02 May 2020 21:13:08 GMT

Sorry for the delay responding.

I received income for being the Executor and agree that I need to report that income.

But I had outside expenses for being the executor (mileage, hotel, etc, since I live over 400 miles away) and thought I should be able to report the expenses I occurred which in turn would increase the net income.

Does that make sense? If so where do I report the expenses?

Thanks!

Re: Are executor expenses treated as income?

fanfare — Sat, 02 May 2020 22:26:13 GMT

your executor compensation on the 1099-MISC is to compensate you for the expense, time and trouble to serve as executor. You can't deduct those expenses.

Re: Are executor expenses treated as income?

rwwmpm100 — Sat, 02 May 2020 22:32:55 GMT

OK, Thanks for your help!

Re: Are executor expenses treated as income?

fanfare — Sat, 02 May 2020 22:37:53 GMT

your compensation should be a percentage of the estate value. What percentage did you get ?