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| FEDERAL INCOME TAX If a person lives for one half a year and earns income, his Executor or Trustee must be sure that income tax is paid on the income earned in that part of the year that the decedent lived. Many Executors are surprised to learn that they must calculate the decedent's income for the partial year and must pay tax on it. The decedent may have had substantial taxes withheld from his wages or may have paid quarterly taxes before death. The Executor will want to check these payments to know precisely how much has been prepaid. In addition, the Executor should check the decedent's income tax returns for the past three years ... and be sure that the income tax has been paid before making final distribution to the heirs. The stories are legion about Executors who paid out all the estate to heirs ... and who, subsequently, received a tax bill for which they were personally responsible. If the decedent had a IRA, 401k, 403b or other deferred pension plan, the Executor may need to pay income tax on those proceeds. Of course, these decisions may involve complex calculations and may require the work of a Certified Public Accountant. To avoid extensive and costly tax calculations on your IRA or pension plan, you may want to designate our cause as the beneficiary of your pension plan. Of course, gifts to charitable causes create a tax deduction. To include us in your IRA plan, just name "The Foundation" as the beneficiary of your plan. You do this by requesting a "Change of Beneficiary Form" from your plan administrator and by naming us on that form. |
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