Is a decedents $900 rebate for car insurance taxable?

[user3446170]

Thank You!

[user3446170]

Does not have to be reported on Form 1041?

[Carl]

No. It was not tax deductible when they paid it. So it's not taxable income when it gets paid back to them.

[TaxGuyBill]

As Carl said, unless it was tax deductible on a prior tax return (such as using the vehicle for business and using the Actual Expense method for vehicle expenses), it is not taxable and does not go on any tax return.

[user3446170]

Again, thank you; IRS should include your's and Carl's info in their 1041 instructions.

[Carl]

The only thing I do wonder though, is why you refer to the rebate as being that of a "descendant". But is really doesn't matter. If the expense was not tax deductible when it was paid, then it's not taxable when it's refunded. Basically, the only difference between a refund and a rebate, is the spelling.

[Carl]

I just caught your reference to the 1041, which indicates you're filing an estate return. My screen shows you are using the desktop version of TurboTax Deluxe, which can't be used to complete a 1041 estate return since that version of the program does not contain the code necessary to generate a form 1041.
I also believe that your reference to "descendent" was a misspelling of "deceased"; probably due to a finger fumble on the keyboard on your part. I do that occasionally, typing "as" when I intended it to be "at", or "less" when I intended to type "more". In a tax support forum such as this one, getting just one word wrong in a sentence can entirely change the meaning of that sentence quite easily.
But still, a rebate, in the sense that it is a refund of at least a portion of the original purchase price, is not taxable income unless the original purchase price paid was a tax deductible expense and that tax deduction was in fact, actually claimed and allowed by the IRS.

[user3446170]

Thank you again, yes, I meant decedent. I currently use Premier but my question was for 2017, but I won't need the 1041 form afterall because the ins. refund was the only refund.

[Carl]

If the deceased had any reportable income in 2017, then at an absolute minimum a final tax return will need to be filed for them - usually by the legally appointed/recognized administrator of the deceased's estate. If a will is involved and/or things go to probate, then most likely a final personal 1040 return, as well as the 1041 estate return will need to be filed to show the final disposition of any and all money of the deceased, as well as any physical assets such as vehicles or real estate titled in their name.