Can You Write Off an Executor's Out of Pocket Expenses?

by Jonathan Lister ; Updated July 27, 2017

An executor manages the affairs of a deceased person's estate, including paying bills, distributing assets from a will document and paying taxes. This professional doesn't incur many tax benefits from performing services as an executor unless these duties are a part of regular business practices. The decedent's estate usually gains no additional deductions or tax credits from the executor.

Separation of Executor/Estate

A decedent's estate and the executor in charge of managing that estate are two separate taxable entities, according to Bank Rate's website. An executor's personal tax liability plays no role in determining the taxes owed by the estate. This means the executor's available deductions and credits or existing Internal Revenue Service tax debt cannot decrease or increase the overall tax liability of the estate the trustee is managing. The executor is simply managing the financial affairs of the decedent in an attempt to close the estate.

Executor Expense Reimbursement

If the executor incurs out-of-pocket expenses on the behalf of the estate, the executor has the legal right to seek reimbursement from the decedent's estate. The court allows an executor to recoup these expenses before all other creditors receive payment. This ensures the executor doesn't lose money for simply stewarding the assets of the deceased. An executor receiving compensation for expenses while in the course of managing a decedent's estate cannot legally use those expenses as tax deductions or write-offs on a federal return.

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Unreimbursed Executor Expenses

A professional operating as an executor, including an attorney or licensed public accountant, not seeking reimbursement for expenses may use these expenses as business deductions on a federal tax return. The professional must routinely operate as an executor for business purposes to claim these deductions as business expenses. The IRS may also require the executor to itemize all tax deductions and provide proof of expenses to write off expenses incurred as an estate's executor.

Executor Charging Fees

An executor is within his legal rights to charge the estate service fees for executing a will document, paying creditors and distributing the assets of the estate. The court must approve all fees assessed by the executor and the executor may not legally take money from the estate without permission. An executor earning more than $400 in fees from the estate must claim this money as income on his federal return. This may increase the executor's overall tax liability resulting in a smaller refund or a larger tax debt.

About the Author

Jonathan Lister has been a writer and content marketer since 2003. His latest book publication, "Bullet, a Demos City Novel" is forthcoming from J Taylor Publishing in June 2014. He holds a Bachelor of Arts in English from Shippensburg University and a Master of Fine Arts in writing and poetics from Naropa University.

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