Executor &
Trustee Fees
If you were paid for serving as an executor or trustee, the fee is taxable income on your return, even though your inheritance is not. Here is how it is reported, when waiving makes sense, and what a fee means for the other beneficiaries.
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If you were paid as executor or trustee
Fees you receive for serving as an executor, administrator, or trustee are taxable income, reported in the year you receive them:
- Serving for a friend or relative: report the fee as other income on Schedule 1 of Form 1040. A one-time family executor generally does not owe self-employment tax on it.
- Serving as a business: if you act as an executor or trustee professionally, the fee is self-employment income on Schedule C.
The fee is income even if you are also a beneficiary. Your inheritance itself is not income, which is why some executors choose to waive the fee.
Taking the fee vs. waiving it
| Take the fee | Waive the fee | |
|---|---|---|
| For the executor | Taxable income | Nothing taxable; they receive their share as an inheritance, which is not income |
| For the estate | Deductible on the estate’s income tax return or the estate tax return, not both | No deduction |
| Where the money goes | To the executor, before the estate is divided | Divided among all beneficiaries under the will |
| Tends to make sense when | There are several beneficiaries, the estate owes estate tax, or the estate has high taxable income | The executor is the only or main beneficiary and no estate tax is due |
Waiving it the right way
If you would rather serve without pay, decide early and put it in writing. The IRS has ruled that a timely waiver showing an intent to serve without pay is neither income nor a gift. If you instead take the fee and later give it back, or wait until the fee is fixed, the IRS can treat it as income to you and then a gift to the other beneficiaries.
If you are a beneficiary and the executor took a fee
The fee is paid from the estate before it is divided, so it reduces what the beneficiaries share. It is not income to you, and it may reduce the estate income that is passed to you on a K-1, because the estate can deduct it. Fees must generally be reasonable and allowed by the will, the trust, state law, or the court; if a fee seems out of line, that is a question for the estate’s attorney.
What we need from you
- The amount of any fee you received and when you received it
- Any tax form the estate or trust issued for the fee
- Whether you serve as a fiduciary professionally or only for this estate
- If you are deciding whether to take a fee: your share of the estate and your expected income for the year
Frequently Asked Questions
How do I report an executor fee on my tax return?
If you served for a friend or relative and are not in the business of being an executor, report the fee as other income on Schedule 1 of Form 1040. A professional executor or trustee reports it as self-employment income on Schedule C. Either way, it is taxable in the year you receive it.
Do I owe self-employment tax on an executor fee?
Generally not, if you are a family member or friend serving once. Self-employment tax applies when you act as an executor or trustee as a business, and can also apply in some cases where the executor actively runs a business the estate owns.
I am the executor and the main beneficiary. Should I take the fee?
Often not. The fee is taxable income, while your inheritance is not. If you would receive the money either way and the estate owes no estate tax, taking the fee usually just adds income tax. If you do plan to waive it, decide early and put it in writing.
The executor took a fee. Is that income to me?
No. The fee is income to the executor, not to the beneficiaries. It reduces the amount left to divide, and because the estate can deduct it, it may reduce the estate income reported to you on a K-1.