Tax advice - sister who recently passed away (1 Viewer)

[Fishboy]

Looking for tax advice regarding my baby sister who recently passed away unexpectedly. 

Main question is do I need to file on her behalf?  Trying to avoid lawyers and the probate route. Thankfully she had a life insurance policy and I was the beneficiary, so that covered the funeral expense. 

Backstory:

Passed away 1/13 at 44 years old. Divorced, no children, no will and no actual estate to speak of. No house, rented and lived with a roommate. Only worked part-time, W2 was around 11k for 2017.  Divorce was finalized this fall and she was receiving 2K/month in alimony. Bank account was less than 10k. No 401k or any other retirement accounts. 

Since she was alive for all of 2017, do I need to file on her behalf?  If she gets a refund, I don't want or need the $$ and if she owes, I certainly don't want to have to pay out of what little there is left over. 

Any advice from the FFA?  

Heck, even moderate schtick is welcome as the past few weeks have sucked given my sister and my grandmother now also passing this past Saturday as well. 

 

[PIK95]

Sorry for your loss.  No idea on the other stuff.

 

[Borden]

Sorry for both of your losses. No idea about taxes at all though. 

 

[RokNRole]

If the IRS thinks she owes why would you have to pay?

 

[Fishboy]

If the IRS thinks she owes why would you have to pay?

Because I'm the beneficiary of her life insurance and will be receiving her monies from her bank accounts. 

Without a spouse or children, I'd assume I'm not responsible for anything, hence asking for advice. 

 

[RokNRole]

Because I'm the beneficiary of her life insurance and will be receiving her monies from her bank accounts. 

Without a spouse or children, I'd assume I'm not responsible for anything, hence asking for advice. 

I’m basing this absolutely no knowledge...

Logically it’s my assumption that what you get from the insurance is your income. Were you to inherit a business or estate from her with debt attached then I can see how you would also inherit that debt.

What I find difficult to see is how you could be held accountable for a personal debt like her taxes. You never know with this backwards system we have but if her W-2 income was only 11k I probably wouldn’t even take the chance . The Feds can’t get you outside of this mortal coil.

 

[Fishboy]

I'm assuming she'd owe, rather than have a refund given the 2k/month she was receiving in alimony.  I'm guessing she would be the one that would be having to claim this amount as income?  

 

[RokNRole]

I'm assuming she'd owe, rather than have a refund given the 2k/month she was receiving in alimony.  I'm guessing she would be the one that would be having to claim this amount as income?  

Is alimony taxed before it’s given?

 

[RokNRole]

If you are inherited the money she had left why should you pay taxes she owes and not just the standard inheritance tax? That’s your money now and has already been taxed.

 

[comfortably numb]

Im sorry for your losses.

I would have assumed the IRS is SOL if she owes?

 

[Fishboy]

I would have assumed the IRS is SOL if she owes?

I'm hoping that's the answer I'm waiting to hear from anyone more knowledgeable than me.

Just trying to complete everything on my list and have closure.  Don't want to be surprised by the IRS months or years down the road.  And trying to avoid the probate lawyers since she really had nothing besides the basic life insurance, a few grand in the bank, a car and really nothing else of value.  

 

[belljr]

So she has no house?  What about credit cards and/or debt?

 

[belljr]

Also just because you were the beneficiary does not make you the executor.

Based on the info about would have different answers

 

[Christo]

Ask yourself this--if your sister was still alive, what responsibility would you have to file her tax return if she chose not to file?

 

[Fishboy]

So she has no house?  What about credit cards and/or debt?

Rented w/ a roommate, so no house.  

Had numerous credit cards, with maybe <3K on those.  Called all those to inform them.  All took my information, none requested a death certificate, which I thought a bit odd and not what I expected.  

 

[belljr]

Rented w/ a roommate, so no house.  

Had numerous credit cards, with maybe <3K on those.  Called all those to inform them.  All took my information, none requested a death certificate, which I thought a bit odd and not what I expected.  

They are going to call you and try to settle using her estate. If you become executor which you may have to to get rid of the car.

If she doesn't have anything and is not getting money back I would not file

Just ignore the calls

 

[Mrs. Rannous]

Looking for tax advice regarding my baby sister who recently passed away unexpectedly. 

Main question is do I need to file on her behalf?  Trying to avoid lawyers and the probate route. Thankfully she had a life insurance policy and I was the beneficiary, so that covered the funeral expense. 

Backstory:

Passed away 1/13 at 44 years old. Divorced, no children, no will and no actual estate to speak of. No house, rented and lived with a roommate. Only worked part-time, W2 was around 11k for 2017.  Divorce was finalized this fall and she was receiving 2K/month in alimony. Bank account was less than 10k. No 401k or any other retirement accounts. 

Since she was alive for all of 2017, do I need to file on her behalf?  If she gets a refund, I don't want or need the $$ and if she owes, I certainly don't want to have to pay out of what little there is left over. 

Any advice from the FFA?  

Heck, even moderate schtick is welcome as the past few weeks have sucked given my sister and my grandmother now also passing this past Saturday as well. 

If she owed taxes, or is owed a refund, someone should file for her.  Your inheritance passed outside of a will, and you do not owe any of her taxes.  You need some sort of statement from a court so you can access her bank account.  The law varies from state to state.  You may just be able to file a Small Estate Affidivit.  You can probably find that out online.  The refund, if any, goes to her estate.  Since she didn't have a will, state law dictates how the money is divided.  Her secured debts are paid first.

Sorry for your loss.

 

[Mrs. Rannous]

Rented w/ a roommate, so no house.  

Had numerous credit cards, with maybe <3K on those.  Called all those to inform them.  All took my information, none requested a death certificate, which I thought a bit odd and not what I expected.  

They are going to call you and try to settle using her estate. If you become executor which you may have to to get rid of the car.

If she doesn't have anything and is not getting money back I would not file

Just ignore the calls

Edited 4 hours ago by belljr

Since you informed the credit card people that she died, they may just write off the debt because it is so low.  Again, the money from the bank and car go to the estate.  The money you inherited is yours, not the estate's.  You owe nothing on her behalf.  Do you have any other siblings or half-siblings?  Check the law in your state to see who gets anything.  Your parents may be entitled to any money after debts are paid, rather than you.

What state did she live in?

 

[eoMMan]

Not sure of the legal form (not a lawyer) but you might need a lawyer simply to file a little paperwork making you the executor.

But yes, a return should be filed.  The return will state that she passed away during the tax year and can be signed by the executor. 

 

[Mrs. Rannous]

Not sure of the legal form (not a lawyer) but you might need a lawyer simply to file a little paperwork making you the executor.

But yes, a return should be filed.  The return will state that she passed away during the tax year and can be signed by the executor. 

She may not need to file.  It does depend on her income for the year.  If she wouldn't have needed to file normally, she still wouldn't.  Otherwise, someone needs to do it.

 

[belljr]

Since you informed the credit card people that she died, they may just write off the debt because it is so low.  Again, the money from the bank and car go to the estate.  The money you inherited is yours, not the estate's.  You owe nothing on her behalf.  Do you have any other siblings or half-siblings?  Check the law in your state to see who gets anything.  Your parents may be entitled to any money after debts are paid, rather than you.

What state did she live in?

Right. Sorry if I wasn't clear that you don't owe her credit, they willl try and get the money out of the estate eventually they will write it off

It happened with my mother-in-law she didn't have anything so we kept getting calls and it finally they gave up

 

[Fishboy]

Since you informed the credit card people that she died, they may just write off the debt because it is so low.  Again, the money from the bank and car go to the estate.  The money you inherited is yours, not the estate's.  You owe nothing on her behalf.  Do you have any other siblings or half-siblings?  Check the law in your state to see who gets anything.  Your parents may be entitled to any money after debts are paid, rather than you.

What state did she live in?

Thanks. State is Wisconsin. Both parents are still alive, as well as one other sister. 

Any $$ that is left over is just being distributed to the 2 nieces and 1 nephew for college funds. All have agreed to that. 

 

[Clown Car]

There's a box on the turbo tax site that specifically asked if (sister) died and you are filing for her. It looks like a simple thing to do. 

 

[eoMMan]

She may not need to file.  It does depend on her income for the year.  If she wouldn't have needed to file normally, she still wouldn't.  Otherwise, someone needs to do it.

The IRS is full of idiots. Much better to file a final return indicating she died versus not filing and leaving it open for a possible mess later from the IRS. 

Regardless of how little of a refund she is due.

 

[belljr]

The IRS is full of idiots. Much better to file a final return indicating she died versus not filing and leaving it open for a possible mess later from the IRS. 

Regardless of how little of a refund she is due.

However if you do this and for whatever reason she never filed before they will want those too.

If you have no estate or money than its not really a big deal.

However if you become the executor they creditors including the IRS get crack at estate assets to settle debts. I'm not talking about the insurance payment the OP received

 

[Cjw_55106]

Sorry for your loss.

She likely owes money. Alimony payments are not taxed when they are paid but taxes are owed on them as income. So if she made 11K, you can probably add another 6-8K, depending upon when in the fall she started collecting alimony.

 

[Fishboy]

There's a box on the turbo tax site that specifically asked if (sister) died and you are filing for her. It looks like a simple thing to do. 

Thanks. Haven't installed turbo tax for this year. Didn't even know that was built in. I helped her file for last year so I do have most of the info. No idea if she was collecting the full 2k per month for the entire year or not though. Anyone know if she'll receive a 1099 or something similar?

 

[Mrs. Rannous]

TaxACT has the option of filing for a deceased person, too.  I doubt you get a 1099 for alimony.

 

[Sand]

Since you informed the credit card people that she died, they may just write off the debt because it is so low.  Again, the money from the bank and car go to the estate.  The money you inherited is yours, not the estate's.  You owe nothing on her behalf.  Do you have any other siblings or half-siblings?  Check the law in your state to see who gets anything.  Your parents may be entitled to any money after debts are paid, rather than you.

What state did she live in?

This looks to be a good answer.  Since there is no will you will have to go through a procedure to get named her executor.  You should spend some time now to assemble her assets to make things easier later.  The estate should file a final tax return - any refund would go to the estate to be distributed.  Every state is different, but if there is no will  there is generally a set pecking order for whom would receive any part of the estate - spouse, children, etc.  

If you're the only close relative getting named as executor should be pretty straight up.  

 

[Fishboy]

Thanks all - I have the Transfer of Affidavit forms for Wisconsin.  Bank recommended it for estate <50K, which we are easily under.  

Guess I'll attempt the 2017 tax forms, not knowing what she received in alimony will be a crap shoot. 

Bank claims I can cash out the 5K or so from her account and that isn't reportable to the state/IRS, so really nothing that the creditors/IRS can go after when all is said and done. 

 

[Mrs. Rannous]

Thanks all - I have the Transfer of Affidavit forms for Wisconsin.  Bank recommended it for estate <50K, which we are easily under.  

Guess I'll attempt the 2017 tax forms, not knowing what she received in alimony will be a crap shoot. 

Bank claims I can cash out the 5K or so from her account and that isn't reportable to the state/IRS, so really nothing that the creditors/IRS can go after when all is said and done. 

I'd be careful with that.  Her estate does owe the money to the card companies, etc.  They may, or may not, write that off.  But you don't get to chose that.  If there was money in the estate, and the IRS decides it is owed some of it, they may come after whoever distributed it.  Can't you just check her bank statements for alimony payments?  Or ask the person paying it?  

 

[Don Quixote]

If you make up an alimony number, it increases the audit risk.  Particularly when it mismatches what the other ex paid and claimed as a deduction.

 

[Fishboy]

I'd be careful with that.  Her estate does owe the money to the card companies, etc.  They may, or may not, write that off.  But you don't get to chose that.  If there was money in the estate, and the IRS decides it is owed some of it, they may come after whoever distributed it.  Can't you just check her bank statements for alimony payments?  Or ask the person paying it?  

No access to the bank statements, at least at the moment.  I'm meeting with them later this week with the Transfer Affidavit and then they'll let me know the actual balance and be able to print out copies of her statements.  

I'm just going by what the bank manager told me, that whatever was/is in her accounts isn't reportable to the IRS or State of Wisconsin. 

I still keep in touch with her ex a bit, but I can't just take his word for whatever he paid her either and just claim that.  The issue is the divorce wasn't finalized until this past August, so before that he was sending $$, I just can't determine how much. 

 

[Mrs. Rannous]

I'm just going by what the bank manager told me, that whatever was/is in her accounts isn't reportable to the IRS or State of Wisconsin. 

This goes to inheritance and that sort of thing, not taxes or debt.  At least your bank seems helpful.  That does make things better.

 

[RokNRole]

This goes to inheritance and that sort of thing, not taxes or debt.  At least your bank seems helpful.  That does make things better.

When is a bank ever helpful?

 

[Conanthecontrarian]

When is a bank ever helpful?

serious question. are you trying to be helpful? the op has had two significant losses of family members and you are in here bringing your zero knowledge regarding the subject Fishboy asked about. can you just not help yourself because you have to make a certain number of posts everyday?

have some compassion for Fishboy and just leave this thread alone and forget about your "you shouldn't have to pay taxes" stance in here. if you can't contribute something of substance to the discussion, stay the eff out!

ps- Fishboy, very sorry to hear about your recent losses. hope everything works out for you. 

 

[Fishboy]

21 days since my sister passed and the first call already from collections. Outsourced to Ascension Recovery. What scums of the earth. 

Continued to ask who the executor of the estate was and if that was me. I asked him to define what he considered an estate. His tone changed quickly when I informed him that she was single, no children, no home, not much of anything. 

Of course wouldn't tell me which company already turned this over to them unless I was the executor of her estate as defined by the courts. 

What a crap ### business to be in. I get trying to collect debt, but let someone be gone for 30 days at least before attempting to collect. Heck, from the paperwork I was able to locate, she wasn't even past due on anything. 

 

[RokNRole]

21 days since my sister passed and the first call already from collections. Outsourced to Ascension Recovery. What scums of the earth. 

Continued to ask who the executor of the estate was and if that was me. I asked him to define what he considered an estate. His tone changed quickly when I informed him that she was single, no children, no home, not much of anything. 

Of course wouldn't tell me which company already turned this over to them unless I was the executor of her estate as defined by the courts. 

What a crap ### business to be in. I get trying to collect debt, but let someone be gone for 30 days at least before attempting to collect. Heck, from the paperwork I was able to locate, she wasn't even past due on anything. 

Tell them to eat #### and die

 

[Mrs. Rannous]

21 days since my sister passed and the first call already from collections. Outsourced to Ascension Recovery. What scums of the earth. 

Continued to ask who the executor of the estate was and if that was me. I asked him to define what he considered an estate. His tone changed quickly when I informed him that she was single, no children, no home, not much of anything. 

Of course wouldn't tell me which company already turned this over to them unless I was the executor of her estate as defined by the courts. 

What a crap ### business to be in. I get trying to collect debt, but let someone be gone for 30 days at least before attempting to collect. Heck, from the paperwork I was able to locate, she wasn't even past due on anything. 

Tell them she died.  No other communication is necessary at this time.  If they harrass you, tell them it is against the law to do that and you will file with the feds/police.  Hang up/ block them.  You owe them no explanation.

I also wonder if they are scammers.  It is way too soon for a credit card debt to have gone to collections.  Dead serious here.  If you didn't contact them and they are unable/unwilling to give appropriate identifying information, hang up.  

 

[Fishboy]

Tell them she died.  No other communication is necessary at this time.  If they harrass you, tell them it is against the law to do that and you will file with the feds/police.  Hang up/ block them.  You owe them no explanation.

I also wonder if they are scammers.  It is way too soon for a credit card debt to have gone to collections.  Dead serious here.  If you didn't contact them and they are unable/unwilling to give appropriate identifying information, hang up.  

I contacted the credit card companies, as I thought that would be the right thing to do to at least inform them and close out the accounts. They all took my info at least when I called. Heck, it was a good week after she passed before I started calling any of them. So it's only been 2 weeks in reality. 

I should have played along at least to see what Jack hole company already sold off her sent. 

 

[Mrs. Rannous]

Remember, you are doing these guys a favor by talking to them at all.  You are not the person who owes them money, nor the admistrator of her estate.  If they harrass you, hang up.

 

[belljr]

They are going to call you and try to settle using her estate. If you become executor which you may have to to get rid of the car.

If she doesn't have anything and is not getting money back I would not file

Just ignore the calls

  Sorry you have to go through this, I think we got calls for like a year

 

[ChiefD]

Remember, you are doing these guys a favor by talking to them at all.  You are not the person who owes them money, nor the admistrator of her estate.  If they harrass you, hang up.

That and I would guess you don't want to claim ownership of anything at this point. So playing along might give them some way to come after him.