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Fred53
Returning Member

My deceased Fathers cash only estate made interest income of $850 in 2019. I paid over $6K to probate attorney. Will attorney fee negate tax on interest income on 1041?

 
6 Replies
tagteam
Level 15

My deceased Fathers cash only estate made interest income of $850 in 2019. I paid over $6K to probate attorney. Will attorney fee negate tax on interest income on 1041?

"Will attorney fee negate tax on interest income on 1041?"

 

Yes, but the estate will be required to file an income tax return since it had gross income for the tax year of $600 or more.

 

See https://www.irs.gov/instructions/i1041#idm140630132235568

 

Also, if the return is a final return, the beneficiaries could possibly benefit from the final year deduction on their personal income tax returns.

Irene2805
Expert Alumni

My deceased Fathers cash only estate made interest income of $850 in 2019. I paid over $6K to probate attorney. Will attorney fee negate tax on interest income on 1041?

It should.  You will have to file a 1041 Income Tax Return for Estates and Trusts since your father's estate had gross income of over $600.  In addition to the $850 interest income, you should include any other income generated after your father's death as well as all expenses (including those paid to the probate attorney).

 

For an estate (1041) return you will need TurboTax Business.  You can visit the following link to purchase the program: TurboTax Business. 

 

TurboTax will take you through an interview to prepare the estate return, similar to the personal (1040) products.  As part of preparing the 1041 return, TurboTax will prepare K-1 forms for each beneficiary.  You will need to enter the information from the K-1 into your personal 1040 return.

 

 

I am so sorry for your loss!

StarGirl18
Level 3

My deceased Fathers cash only estate made interest income of $850 in 2019. I paid over $6K to probate attorney. Will attorney fee negate tax on interest income on 1041?

I received the state's final informal administration, which had the receipts on one side, and the disbursements on the other side, which equaled.  The proposed distribution of the estate was 11,000 less than Asset on Hand.

The Personal Rep, took 6500 and the attorney took 4500.  It appears these fees were not on the 1041, right? Can I deduct those fees on my 1040SR?  Also on the 2K-1 given, there was no income Fed or state, but State Local Taxes were listed as a adjustment, positive number, so I assume I have to add that to my income, right?

No taxes reported on the K-1.  Thanks in advance.

RobertG
Expert Alumni

My deceased Fathers cash only estate made interest income of $850 in 2019. I paid over $6K to probate attorney. Will attorney fee negate tax on interest income on 1041?

Executor and accounting fees should be deducted on the 1041. 

 

Legal fees are no longer deductible on the 1040.

 

If state and local taxes are shown as part of the Beneficiary's share of deductions on the K-1, then they would be deductible as an itemized deduction on your 1040.

 

@StarGirl18

 

 

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StarGirl18
Level 3

My deceased Fathers cash only estate made interest income of $850 in 2019. I paid over $6K to probate attorney. Will attorney fee negate tax on interest income on 1041?

The state and local taxes were only shown on the state 2K-1.   Someone in the community told me that was an addition to my income, not a deduction.  I still don't understand why.

RobertG
Expert Alumni

My deceased Fathers cash only estate made interest income of $850 in 2019. I paid over $6K to probate attorney. Will attorney fee negate tax on interest income on 1041?

What State?

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