My wife is the executor of her mother's estate. In 2013 took her executor's fee from the estate account. It was not reported to the IRS and we didn't receive any W2 or 1099.

I completed and e-filed our taxes and I totally forgot to report this income. My understanding is that I should have reported it on line 21 of the 1040 as other income.

Now do I need to file an amendment? Or can we just return the money back into the estate account and try again for 2014? Or can we report it as a principal distribution so that it's not taxable since we have not trust taxes yet (although the check says "executor fees" on the memo line)?

#1; Under federal tax laws, executor’s fees are taxable income; the fee is taxable income. You neeed to report it on line 21 of the Form 1040. Declaring your executor fees as non-employee compensation means that they are taxed at your marginal income tax rate, which depends on the level of your AGI.


#2; I guess yu need to file 1040x; as you need to report additional income that you did not include in your gross income, you'll need to file an amendment.
regardless of whether you receive a 1099/w2, you are subject to income taxes on the earned income. This is why so many executor's waive their fees and just take distributions which are not subject to income taxes

Thank you for replying.

My question now is whether I have any leeway because I have not filed trust taxes yet. If I declare it as a distribution on the trust 1041 then I should OK with my personal 1040, regardless of what the memo line on the check says right?

There is no requirement for an executor to take a fee for services, but it’s allowable. However, a commission is earned income. Being an executor is a job, and the compensation that you receive is earned income, subject to income tax. You must claim the commission on your personal income tax return on 1040, as earned income.So,aslongas you take some or all of the statutory commissions, then you must report those commissions for income tax purposes. In such a case, the estate would receive a deduction for state and federal estate tax purposes. So just because you can take a commission, you don’t have to. It’s common for close family members who serve as executors to waive all or some of their commissions but there may be cases where taking the commission is advantageous. Where a sole beneficiary serves as the only executor, the executor would take commissions and report them as taxable income only if doing so would save overall taxes. This would occur if the resulting income tax would be less than the estate and inheritance tax savings.

Thanks again for replying.

Does the memo line of the check matter or only what the returns (1040 & 1041) say?