Estate Taxes
My mom passed with an regular IRA and an IRA annuity, with the beneficiary listed as her estate for both. Lawyers, who setup mom’s will and had all of her asset information before she passed, advised us to distribute all funds to the estate account, which was used to pay remaining debt and then distributed to the estate beneficiaries. We then filed taxes for the estate (1041 form) and ourselves working with the CPA at the law firm, with each of the estate beneficiaries paying income taxes on the money that was received from the distributions. The amount in the estate account was under $750,000 and the lawyers advised that we wouldn’t have to pay federal estate tax because it was less than the exemption amount. Fast forward to 2023 (tax year referenced was 2021), and we receive a notice from the IRS that the estate owes over $200,000 in taxes stating there was an error in the 1041 form that was completed by our CPA. We’re working with them now, but trying to understand if there will be taxes due on any of the assets.
