topic Deceased final federal return with overpayment of state tax deduction in Deductions & credits

Deceased final federal return with overpayment of state tax deduction

judeetaxes — Tue, 09 Mar 2021 18:54:22 GMT

Filing my mother-in-law's final returns and taking the state tax paid deduction on Schedule A. The state will issue a refund for over payment. Normally this refund gets accounted for in the following year. If I enter the correct tax due the state in Schedule A, then the state return has the wrong amount for estimated taxes paid. How should this be handled?

Re: Deceased final federal return with overpayment of state tax deduction

JotikaT2 — Tue, 09 Mar 2021 19:48:14 GMT

The taxing agencies will most likely issue you a notice of adjustment for any changes made.

As this is a final income tax return for the taxpayer, there would no longer be any individual tax return filing requirements for them.

Re: Deceased final federal return with overpayment of state tax deduction

judeetaxes — Tue, 09 Mar 2021 19:53:00 GMT

Can I just use the override feature to correct the amount on Schedule A from tax paid to tax due amount? I tried this and it did not affect the state return. Then this filing would be the end of it.

Re: Deceased final federal return with overpayment of state tax deduction

DawnC — Tue, 09 Mar 2021 20:08:22 GMT

You don't need to override anything, take the deduction, and this tax return will be the final one. There will be no filing requirement next year.

Only income earned between the beginning of the year and the date of death should be reported on the final return. For taxpayers who use the cash method of accounting, as most do, income is considered earned as it is actually received or at least made available to them. Taxpayers who use the accrual method of accounting, on the other hand, count income as earned when they actually earn it, regardless of when they receive it. The distinction is important because some income that might logically seem to belong on the decedent's final return is considered income in respect of a decedent (defined below) and is taxable either to the estate or to the person who receives it.

I am sorry for your loss.