Are executor expenses treated as income?

Forum|Forum|6 years ago
August 25, 2019
3 replies
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I know where on my 1040 to enter the executor fees I am being paid as an executor for a friend's estate. But where do I enter the expenses I am being reimbursed for such as mileage and various supplies? Would the reimbursed amount for expenses be considered income just as the executor fee is?

Best answer by pk_

Thank you @Critter Critter for your patience.

I need to make sure you understand that I am asking about personal compensation I am receiving as an executor. It seems you are saying the compensation I receive is to be considered to be reimbursement. I do receive reimbursement for car usage, for example. But the compensation I receive is payment for my labor. Shouldn't income from that labor be declared on my 1040 as income?

I've always read that: "Under federal tax laws, executor's fees are taxable income. How you declare these fees as income and how they are taxed depends on whether you are in the business of being an executor." I am not in the business of being an executor. I am handling the estate for a friend.

From other answers here, I assumed that the actual expenses I incur are also to be handled as income.

I assume my compensation and my expenses would be treated as expenses on the 1041 estate form when it is filed.

Please correct my misunderstanding.

Thank you

@Frank nKansas , agree with @Critter that

for the estate return --- your compensation and the reimbursements ( for necessary and customary expenses solely associated with the effort of administering the estate ) are expenses to the Estate and reported on form 1041. I am assuming here that the Estate required you to provide adequate proof of the expenses that you as an executor claimed.

For your individual return, the compensation is a taxable income ( generally as "other " since you are not in the business of managing Estates ). The reimbursements are really making you whole i.e. reimbursing expenses that you incurred and generally should not be treated as an income . That is my general stance on this . However, I do agree that this could be a sticky wicket depending on exactly which expenses are being reimbursed and what rate.

Carl

Level 11

It's all taxable income to the executor. As executor you don't get to claim anything such as mileage and the such. Anything you're "reimbursed" for is part of your taxable executor income and is reported as such.

Frank nKansasAuthor

Level 5

Thank you. I'll just enter my expenses and my compensation as two separate entries and show both as regular income on my 1040.

Critter

Level 15

NO ...you do NOT enter the expenses or the reimbursement on YOUR income tax return since is it neither income or an expense. The estate will deduct the expense since it reimbursed you for it so it is THEIR expenses to deduct not yours.

Critter

Level 15

The estate should only report your executor fee on a 1099 and that is all you need to report on the tax return. Reimbursed expenses that you give the estate a detailed report are deducted on the estate return not yours.

rwwmpm100

Level 2

I was the executor of my mothers estate.

I received a 1099 Misc for non employee compensation. Can I deduct my expenses for being executor. IE mileage, other travel expense to reduce this income. I wasn't paid by the estate for these expenses.

Let me know

Thanks!

pk_

Level 15

@rwwmpm100 , while I generally agree that the income for providing the service ( as an executor ) needs to be recognized and required / customary expenses used to offset the income on a schedule-C, I am not clear about the 1099-MISC. If the 1099-MISC is issued by the estate or by one of the beneficiaries , to you it is your income. You can also show this as income for the Estate and then expense it from the Estate -- no matter how it gets to your hands , it is still your income and must be recognized and reported on schedule -C

Does this make sense or am I missing your situation?