Ask TaxMama.Com Tax Information With A Mother's Touch Published by Eva Rosenberg, MBA, EA Volume 6, Issue 249        March 5, 2004

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Mom's Estate » From: Cyberspace Dear TaxMama: Any information on 1041s? I am settling our mother's estate, and it appears that the interest from one investment (annunity} should have K-1s issued to the three heirs? The interest amounted to $12,000.00. Other than that, it appears no other income need be taxed or reported since it was under the $8,000 limit. I have ordered the 1041 instruction book by snail mail from IRS. Is there any way the estate could pay the tax on this amount instead of issuing 3 k-1's for $4,000 each? HELP! And thanks in advance. Janet Hi Janet, So sorry to learn about your mother. And it's good of you to take the responsibility to sort all this out for your family. It's even tougher, forcing you to keep facing the fact that she's gone. If the estate pays the tax, the rates are MUCH higher than if the heirs do. The estate only has a $600 exclusion (exemption) on taxable income. Where ever did you get the $8,000? And yes, you will have to issue the K-1s to the heirs. If you also gave them their share of the money, they have the funds to pay the taxes. Here is the form Here are the instructions With just this one source of income, it shouldn't be hard to prepare. Be sure to see if there are any deductions you can use to reduce the overall income that gets passed through. Read the instructions. It will give you some ideas. Best wishes, Eva Rosenberg Your TaxMama

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