Are executor expenses treated as income?

[fpc]

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?

[Carl]

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.

[Critter]

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. 

[fpc]

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

[Critter]

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.

[fpc]

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

[pk · Accepted solution]

@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.

[fpc]

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.

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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!

[rwwmpm100]

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! 

[pk]

@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?

[fanfare]

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.

[pk]

@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

[rwwmpm100]

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!

[fanfare]

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.

[rwwmpm100]

OK, Thanks for your help!