My mother passed away in May of 2010. Her home was in a trust (may have had both of our names on it) and I am the beneficiary. Before her death there was an IRA to Roth IRA conversion. I am the beneficiary of the Roth IRA and took possession in December of 2010. Will I have to pay what is owed on her income taxes? She had no other assets besides those mentioned above.
It sounds like this could be a situation where the personal representative should file a tax return on behalf of your Mother. On the written, you should notate that she is "DECEASED", as well as the date of death.
Although it is rare, there are situations that would cause the IRS to seek collection activity for unpaid taxes or unfiled returns of recently deceased. If the deceased leaves an estate or an inheritance to his family, it can be seized to satisfy the outstanding Tax Debt.
The tax return should report any income the deceased person received before the date of death, as in your situation, any income in the year 2010 before May 2010. The full standard deduction and personal exemption can be claimed on the tax return.
Be sure to talk with a tax professional or attorney to see what forms need to be filed in this particular case.
Disclaimer: This answer does not constitute legal advice and should not be relied on. Each factual situation is unique and if you need further legal assistance, you should contact an attorney near you. Also, in no way does this answer create an attorney-client relationship.
Elder Law Attorney
Generally, the estate answers for the debts of the decedent... check with your mother's tax preparer to see if any taxes were withheld at the time of the conversion... get a tax lawyer to review the situation....
The estate must file an income tax return for the period 1/1/10 to May_,2010. The Roth conversion would trigger the inclusion of the amount in this return. The estate would be responsible for such taxes due. However, the estate may have the ability to revoke the Roth conversion under IRS rules. Whether to do so depends on running the numbers. Get with an estates/tax attorney right away to see what to do and to do this timely.
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I concur and agree with my fellow attorneys.
Provided that the conversation from the IRA (assuming traditional IRA or the like) to ROTH IRA is upheld, expect income taxes to be owed.
Please immediately consult your tax attorney, accountant, tax advisor, etc. to determine the proprer amount of income tax to be paid if you have not done so already.
Suzanne Alexandra Ascher, Esq., CPA, Tax LL.M.
Legal disclaimer by Suzanne Alexandra Ascher, Esq: My answer is strictly for information and education purposes only and therefore my answer does not form any attorney-client relationship and attorney-client privilege between me and you. These questions and answers on AVVO.COM are no substitute for actual qualified legal advice by an actual licensed attorney in good standing with the bar who can become fully informed of your entire situation above and beyond the limited description of your situation in your question. Further, nothing posted in this public forum of AVVO.COM is deemed confidential or privileged communication. Finally, in accordance with IRS Circular 230 disclosure, federal (United States) tax advice provided in this communication is neither intended nor written to be used, and cannot be used, by to avoid penalties under the Internal Revenue Code or to promote, market, or recommend to anyone a transaction or matter addressed in this communication.
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