coming to grips with estate income tax 1041

[slowreader]

Okay, so any income received by my spouse after her death is taxed to her estate, right? I calculate that the fiscal year ends April 30 and the 1041 is due August 15, right (assuming no extension).

Now, I don't have to pay the awful "kiddie tax" tax rates from the 2017 tax legislation if the money is distributed to the beneficiary, right? And I'd declare her total income and then pass it through to myself on a form K-1 so that it will appear on my 2024 tax return?

Can capital gains be passed through to the beneficiary as well? I gather that in the case of a trust, it's the trust that must pay the capital gains tax, but that doesn't seem to apply to an estate that will end in the present calendar year.

I file a Schedule C as self-employed. Can I bill the estate for the time I spend on the estate 1041?

I'll be grateful for any and all answers, and for deductions that haven't yet occurred to me. Thanks! - Dan

[M-MTax]

Sorry for your loss.

1. Income received by her estate is taxed to her estate. Income from any joint accounts or anything that passed directly to you is not.

2. Y/E 4/30/2023 would mean the 1041 is due on the 15th day of the 4th month so 8/15/2024.

3. Kiddie tax? It doesn't matter how kids get taxable income. If it's taxable it could be subject to that tax.

4. You would pass your share of the income through to yourself on a K-1 and that would be for 2024.

5. Capital gains can be passed through absolutely on the final 1041 return.

6. Trusts are mostly the same as estates in their final year.

7. Need to watch out for paying yourself fiduciary fees.....for your time spent on the estate......without authority in a will or trust or court approval. You wouldn't want to report any fees you collect on your schedule c anyway. You can recover most of your out of pocket costs though. 

[slowreader]

Okay, sounds reasonable. Thanks for the caution on paying myself. (I certainly intend to do that with respect to managing her trust, which specifically provides for that.) As for the kiddie tax, it applies to trusts, too, and I would assume estates, with tax rates up to 37 percent! It's called the kiddie tax because it applies to anyone up to the age of 24, and the unplanned victims were the Gold Star children who parent was killed in combat and whose payouts of course were "unearned income." That bit of stupidity was later fixed, sort of, but the 37 percent tax rate remains for the non-kiddies with interest and dividends.

[M-MTax]

@slowreader Yes I know what the kiddie tax is but can't figure out why you might have thought it wouldn't apply to taxable income received on a K-1. It does and I think you realize that now?

[slowreader]

The 37 percent tax on unearned income that applies to trusts under the 2017 kiddie tax (and I assume but don't know applies to estates as well) costs me a maximum of 23.8 percent when passed through to my form 1040. 

Now I begin to wonder about the wisdom of your other statements....

[M-MTax]

In your original question you asked about the kiddie tax and yes it does apply to taxable income distributed to a "child" no matter what the source.

Not sure where there confusion lies now. Estates and trusts are taxed at the same rates though.

[M-MTax]

Now, I don't have to pay the awful "kiddie tax" tax rates from the 2017 tax legislation if the money is distributed to the beneficiary, right?

OK........WRONG! If the money....taxable....is distributed to your dependent who is 18 years of age or under or who is a full-time students under age 24 that income is unearned and could be taxed at your marginal rate. 

Is this what you're talking about here?