Is the executor allowance taxable?
I am the executor of my mother's will. The county allows a 5% allowance of the amount of the estate if under $200,000 to be given to the executor for his work. Is the 5% allowance taxable under NJ state or federal law?
2 attorney answers
Yes you will include it in your income for income tax purposes. Since you are not in the business of being an executor you won't have to pay self employment tax on it.
Executor commissions, as well as trustee fees are taxable income and should be reported on your federal income tax return. To the extent that NJ state taxes start off of federal AGI, unless there is a deduction for executor fees, it will be taxable for the state of NJ also.
Ms. Willi is a tax attorney, CPA, and Ohio-Certified Specialist in Estate Planning, Trust & Probate Law, with offices in Westerville, Ohio. She serves client families and private business owners throughout Ohio. Ms. Willi responds to Avvo questions as a public service to help educate and provide general guidance to questioners, but her responses are not legal advice and do not create an attorney-client relationship. Her posts are provided for informational purposes only and are not a substitute for advice provided by an attorney or licensed tax professional. Her phone number is 614-890-0500 and her website is www.willilaw.com.