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dianecharity1502
April 1, 2025
Solved

Form 1041 How to report federal tax refund received for year prior to death

  • April 1, 2025
  • 1 reply
  • 0 views

Niece died in February 2022 and I received her federal tax refund for 2021 in 2022.  I don't believe the refund amount is taxable on 1041, but instructions in TurboTax and on IRS website say to show amount on Line 8 (income).  When I do this the amount is used to calculate taxes owed.  I've read several articles which state the amount is used for estate accounting but should be ignored for tax purposes.  How do you report the federal tax refund on line 8, but not have it included in income and pay tax?

Best answer by RobertB4444

State tax refunds are reported as income if you itemized deductions in the year that they were refunded for.  That is what gets reported there on line 8.  Federal tax refunds are not reported as income to the estate.  They have already been taxed while your niece was alive.

 

Sorry for your loss.

 

@dianecharity1502 

1 reply

R
RobertB4444Answer
April 1, 2025

State tax refunds are reported as income if you itemized deductions in the year that they were refunded for.  That is what gets reported there on line 8.  Federal tax refunds are not reported as income to the estate.  They have already been taxed while your niece was alive.

 

Sorry for your loss.

 

@dianecharity1502 

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