My mother passed away in 2016 and I'm filing her tax refund and have referred to IRS publication 559 and completed form 1310 to claim her refund. Although she is due a federal refund, she owes state tax which exceeds the federal refund. I'll apply the federal refund to pay for the state taxes.
My question is because I'm filing form 1310 to claim the refund, will that refund be considered taxable income on my personal taxes for next year's filing? I don't want to be liable for potential tax consequences when clearly the refund will be applied to the state tax payment.
I'm unclear on how to proceed and are there future tax liabilities for me.
I am very sorry for your loss. It sounds like you have done everything that would have been recommended. With respect to the refund, it is just a return of money that was already paid by your deceased mother, so it is not taxable. However, any interest that may have accrued on the refund would be subject to tax.