I was recently sole executor for an estate and last year took a commission and reported on my 2023 Schedule 1 as 'Other Income" as I believe you should.
Then as I was closing down the estate I got bad advice from attorneys on how much reserve to set aside for last bills to court and to attorneys so in the end (in tax year 2024) the estate ran out of money and I had to pay some bills (~$3,500) from personal account to get the estate closed and move on.
I believe this can be treated as a 'return of commission'.
So now I am wondering if I can claw back the tax consequences of over-declaring the income last year.
I have discovered that:
a) Shedule 1 Other income line can take a negative number on Federal return but my state (MA) will not take a negative number for the other line item on its filing. So my original plan of putting a negative number in 2024 in the same place I put it for 2023, I think would work for Federal? but doesn't look like it would work for State.
Does anyone have any suggestions on how I should try and 'reverse' this prior year income?
The only other thing I can think of is to file an amended return with that number changed.... but in reality the original return was correct at the time and this is a later re-statement.
Perhaps there is a parallel situation where say a salesperson has to return some commission already paid to them at an earlier date and do so at a later date. Does anyone have any precedent on this or guess as to the best way to treat it?
Thanks
