Wanting to clear something up before end of year 2024.
My brother is executor for my mother's estate. There were old long-since matured savings bonds in a safe that got cashed in earlier in 2024, including something like $75k in interest. Because multiple sibling inheritors expect lower 2025 incomes than 2024, he had been planning to delay estate distributions until Jan 2025.
However, I *think* I've just learned that such a delay would require an estate income tax return for 2024 that would have to pay 37% Fed on that interest! But if he distributes during Dec 2024, the estate no longer pays the tax but each sibling must include their share as 2024 income on their own tax returns. As far as I understand, no sibling will be above 22% in 2024 though at least a couple were expecting to drop to 12% in 2025.
Have I got this right? Should I urge him to distribute any interest income right away within 2024 to avoid a 37% tax hit?
My brother is executor for my mother's estate. There were old long-since matured savings bonds in a safe that got cashed in earlier in 2024, including something like $75k in interest. Because multiple sibling inheritors expect lower 2025 incomes than 2024, he had been planning to delay estate distributions until Jan 2025.
However, I *think* I've just learned that such a delay would require an estate income tax return for 2024 that would have to pay 37% Fed on that interest! But if he distributes during Dec 2024, the estate no longer pays the tax but each sibling must include their share as 2024 income on their own tax returns. As far as I understand, no sibling will be above 22% in 2024 though at least a couple were expecting to drop to 12% in 2025.
Have I got this right? Should I urge him to distribute any interest income right away within 2024 to avoid a 37% tax hit?
Statistics: Posted by ER_LatePlanner — Sun Nov 24, 2024 6:28 am — Replies 0 — Views 35