Which of the following statements is FALSE regarding a decedent?

Question

A final tax return for a decedent must include their income and deductions up until the date of their passing.
A final tax return is never required for a decedent, regardless of their income level or whether they owe taxes.
If a decedent's gross income exceeds the filing threshold set by the IRS for that tax year, then a final tax return must be filed for a decedent.
When a person passes away, their final tax return needs to be filed for the year of their death.

Answer 1

The FALSE statement regarding a decedent is:

"A final tax return is never required for a decedent, regardless of their income level or whether they owe taxes."

This statement is incorrect because a final tax return is required if the decedent's gross income exceeds the filing threshold set by the IRS for that tax year.

Answer 2

Audrey has a bank account at Lending Bank. She received Form 1099-INT, Interest Income, shown below. She has no other interest or dividends to report. Where should this income be reported on Audrey's tax return?
$410 on line 2a and $230 on line 2b of Form 1040.
$640 on line 2a and $0 on line 2b of Form 1040.
$640 on Part I of Schedule B.
$640 on line 2b of Form 1040.

Answer 3

To determine where Audrey should report her interest income based on the amount from Form 1099-INT, we need to first understand how this income is categorized on the tax return.

Given that Audrey received interest income totaling $640, she must report this income correctly. The IRS Form 1040 has specific lines for reporting interest income:

• Line 2a is for "Tax-exempt interest" (which would typically be zero if she only received regular interest).
• Line 2b is for "Taxable interest."

Since her total interest income is $640 (which is presumably subject to tax), she would report the following on her Form 1040:

• Line 2a would be $0 (assuming none of the interest is tax-exempt).
• Line 2b would be $640.

However, if Audrey has total interest income of $640 and no qualifying tax-exempt interest, the correct answer would be:

$640 on line 2b of Form 1040.

This option accurately reflects how she would report her interest income. If she had more than a certain threshold of interest income and also had other sources of interest to report, she might also need to use Schedule B, but that's not indicated in your scenario.