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Lester14
New Member

Money paid by deceased estate for work performed

My wife did in-home healthcare for a sister in-law over a period of years. The sister in-law did not have the money at the time to pay her so the understanding was it would be paid from the estate after the sister in-laws passing. There was no problem with this as the heir recognized the work done and agreed. So my wife has received a lump sum for the work performed. How do I report this for taxes, SS and Medicare?

3 Replies
ToddL99
Expert Alumni

Money paid by deceased estate for work performed

How you report this payment depends on the answers to at least the following questions:

  1. Did the estate report the payment (to your wife) on Form 1099-MISC or Form 1099-NEC?  
  2. Was your wife certain of getting payment from the estate for her services, or was it only a hopeful expectation that her services would be recognized by the estate?
  3. Did your wife incur any expenses in providing home health-care to her relative?
Lester14
New Member

Money paid by deceased estate for work performed

Thanks for the reply. 

1. No 1099's were issued.

2. It was a verbal agreement only. It was not certain if there would be enough funds in the estate for both the heir and for for my wife.

3 No expenses were incurred other than driving to the sister in law's house which was in the same town and negligible.

PattiF
Employee Tax Expert

Money paid by deceased estate for work performed

You would report the self-employment on a schedule C and pay self-employment taxes to cover the Social Security and Medicare taxes. Vehicle expenses could be deducted from the income if you wish.

 

Here are instruction to enter the income on a Schedule C:

 

We'll automatically complete Schedule C when you set up your self-employment work in TurboTax.

 

In TurboTax Desktop

If your self-employment income was only from cash or  personal checks

 

  • Open your return and type Schedule C in the Search box. Select the Jump to link.
  • This will take you to where you can enter any cash, personal checks under General Income 
  • Click Continue, Business Expenses could be entered under Business Vehicle Expenses
  • Continue and select No for Is this Qualified Business Income?

Form SE will be generated from this business entry where the SS and Medicare taxes will be paid.

 

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