PA 41; Schedule NRK-1; nonresident beneficiary

Forum|Forum|1 year ago
September 4, 2024
1 reply
11 views

I am preparing a PA-41 estate tax return for a estate that is considered a resident of PA. There are two beneficiaries who are residents of MD. Therefore, they are to receive Schedule NRK-1, reporting to them, as non-residents of PA, there respective shares of estate income. At least I think I have this part right so far.

The software if I am completing things correctly is showing their income on Schedule NRK-1, but is also calculating the amount of PA income tax owed, and saying that tax is withheld. This seems odd to me.

Example. NRK- for particular beneficiary that lives in MD shows income from Estate or Trusts line 1 in section II of $32,533. Then on line 2 of Section II, "PA nonresident tax withheld" the amount is $999.

Must the Executor of the estate actually withheld PA income tax for this, and pay that into PA Dept of Revenue? If so, what are the mechanics of that, and how is that done. All seems rather odd.

ProSeries Professional

This topic has been closed for replies.

sjrcpa

Level 15

Maybe.

What kinds of income do you have?

The more I know the more I don’t know.

J

JeffCPAAuthor

Level 5

Great questions. The decedent was a resident of PA. So, the estate is a resident of PA. Decedent owned a 403b account at Fidelity. Unfortunately he did not name beneficiaries for the account. So, the proceeds of that Fidelity 403b account were paid to the decedent's estate. So, the Estate received about $500,000 or so of 403b distributions, which are now being distributed to beneficiaries according to the terms of the will.

I did not ask this question, but I am also struggling with the notion of whether this 403b distribution paid to his estate is really considered taxable income. If it were paid out directly to beneficiaries, if he had named them, I believe it would have been coded on a 1099R with a 4, and not be taxable.

I am treating it as taxable income on PA-41, line 6, "estate or trust income" distributed by the estate to the various beneficiaries.

Accountant-Man

Level 13

If the decedent when alive had received a 403b distribution, the PA individual would not owe an PA income tax as long as decedent was at least 60 years old.

There should be zero taxable income to PA for this.

** I'm still a champion... of the world! Even without The Lounge.

Sign up

Login with SSO

Let's get you signed in

Login with SSO