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Does anyone know who pays the tax on the US Bond interest?

All bonds were redeemed and added to the estate account to be shared equally by three heirs.I was instructed to get an EIN number from IRS.

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4 Replies

Does anyone know who pays the tax on the US Bond interest?

If, after the death of the account holder, income was received in either the account holder's name or possibly into the Estate's name, the Estate must account for and report that income.  If the Estate then, within the same year, distributed that income to the Beneficiaries, the distribution will relieve the Estate's tax liability by passing the tax liability to the Beneficiaries.  A Form 1041 is needed to report the income received and if any distributions were made or deductible expenses were paid out.  Generally, the Form 1041 is required for income in the amount of $600 in total or more, but for even less amounts, it is still a good idea to file the Form 1041 because it establishes the transfer of assets and income and therefore protects the Personal Representative (Executor).

This IRS write-up is an excellent resource to start learning the process:
https://www.irs.gov/businesses/small-businesses-self-employed/deceased-taxpayers-filing-the-estate-i...

Go here to use the online IRS EIN application filing system:
https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-n...

If this posted response is useful to you, please click on the upraised hand in the lower left of this post. Thank you. Scruffy Curmudgeon--PFFM/ IAFF, retired FireFighter/Paramedic - Locals 718/30, Veteran USAR O3 AIS/ASA '65-'67


NOT INTUIT EMPLOYEE
USAR 64-67 AIS/ASA MOS 9301 - O3

- Just donating my time
**Say Thanks by clicking the thumb icon in the lower left corner -it means nothing but makes those than answer feel wanted.

Does anyone know who pays the tax on the US Bond interest?

Is there a way for the estate admin to pay Bond interest tax to relieve the heirs from this burden?

Does anyone know who pays the tax on the US Bond interest?

see response below
If this posted response is useful to you, please click on the upraised hand in the lower left of this post. Thank you. Scruffy Curmudgeon--PFFM/ IAFF, retired FireFighter/Paramedic - Locals 718/30, Veteran USAR O3 AIS/ASA '65-'67


NOT INTUIT EMPLOYEE
USAR 64-67 AIS/ASA MOS 9301 - O3

- Just donating my time
**Say Thanks by clicking the thumb icon in the lower left corner -it means nothing but makes those than answer feel wanted.

Does anyone know who pays the tax on the US Bond interest?

If in the tax year in which the income was received, that income is in fact not distributed, then it is the liability of the Estate to pay  tax.  That said, just be aware that Estate Income Tax rates are typically higher than Personal because the brackets leading to the maximum tax rate occur much faster at lower level of income for the Estate than would be for the comparable personal rate paid by the Beneficiaries.
If this posted response is useful to you, please click on the upraised hand in the lower left of this post. Thank you. Scruffy Curmudgeon--PFFM/ IAFF, retired FireFighter/Paramedic - Locals 718/30, Veteran USAR O3 AIS/ASA '65-'67


NOT INTUIT EMPLOYEE
USAR 64-67 AIS/ASA MOS 9301 - O3

- Just donating my time
**Say Thanks by clicking the thumb icon in the lower left corner -it means nothing but makes those than answer feel wanted.
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