What is an “income in respect of a decedent”?

An "income In Respect of a Decedent" (IRD) refers to income that a person was entitled to but did not receive before dying. This type of income is not treated as part of the estate of the decedent and is passed directly to the beneficiary of the IRD. In Rhode Island, an IRD includes wages, bonuses, commissions, accrued vacation pay, sick pay, self-employment income, or any other type of income the deceased was entitled to but had not yet received. The beneficiary of the IRD may be a spouse, child, beneficiary of a trust, or other relative of the decedent. The IRD may be subject to federal or Rhode Island state income tax, depending on the circumstances of the individual. In Rhode Island, any IRD income held by the deceased at the time of death must be reported to the Internal Revenue Service as part of the deceased’s estate and the income will be taxed accordingly. Additionally, any IRD income paid out to a beneficiary after the deceased’s death must also be reported as income on the beneficiary’s personal income tax return. It is important to know that all rules, regulations, and tax obligations regarding IRD income vary from state to state. Therefore, it is important to seek advice from a qualified attorney or tax professional to ensure the correct application of the law in a particular situation.

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