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grosswi1
Returning Member

For an Estate Form 1041Income, what exactly is considered income? Would insurance premium refunds, Prescription rebates, Hosp. Ins. Policy claim payments be income?

I'm trying to understand the scope of what is considered income so as to verify whether the $600 threshold has been reached.  I've studied IRD - Income in Respect to a Decedent and understand that only income that would be otherwise received by the decedent had they lived to be in scope.  Such as:

Prescription Drug Rebates - Yes?

Hospital Indemnity Policy Claims - Yes?

Insurance Premium Partial Refunds - No?

Publication/Subscription Partial Refunds - No?

Bank credit card credit balances - No?

2 Replies
martinmarks
Level 10

For an Estate Form 1041Income, what exactly is considered income? Would insurance premium refunds, Prescription rebates, Hosp. Ins. Policy claim payments be income?

That all looks right because the refunds are for periods following death but they're not really income that would be taxable......those are funds deceased paid for personal items and now the unused part is being returned. Credit card balances? No.

SamS1
Expert Alumni

For an Estate Form 1041Income, what exactly is considered income? Would insurance premium refunds, Prescription rebates, Hosp. Ins. Policy claim payments be income?

When the estate was created, a new taxpayer was created.  Think of the estate tax return 1041 as you would a 1040.  The same taxable income rules apply.  If this were the decedent's personal tax return would you include any of the listed items on their 1040?  If the answers is no, you would not include them on the estate return.  So regarding the Prescription rebates, did they claim the medical deduction in a previous year or were they under the filing limit?  If they did not deduct the Prescription Drugs then you do not need to include the rebates.  Same with the Hospital policy claims.  The rest are definitely no.

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