1099R Death Benefit Distributed to Me But Included in Separate Trust Family Tax Return

[bc9460115]

After my father passed away a total death benefit/survivor annuity check was sent to me, instead of being divided and sent to myself and two brothers. Federal taxes were already removed, I distributed this money equally between myself and two brothers, but now I have the total amount added to my taxable income due to the 1099-R filing with the IRS, and as a result now have a big tax bill. The accountant who filed the Trust return for my family included the total death benefit distribution in the 2022 family Trust tax return and advised me to report the total on my personal tax return, but then deduct the same amount since it was included on the Trust tax return. I added the 1099-R information in my personal Turbotax tax return, but do not see where I can deduct out or adjust the total.

[Carl]

This can (and will) get complex. The root cause of this is not a tax issue per-se. You need to check with the issuer of the 1099-R for the beneficiary designee s. More than likely, you were designated as the primary recipient at 100%, with your bothers as secondary recipients in case you were not alive at the time of your father's passing. If so, then the 1099-R is correct and you owe tax on 100% of the proceeds, regardless of what you do with those proceeds.

[Mike9241 · Accepted solution]

After my father passed away a total death benefit/survivor annuity check was sent to me, instead of being divided and sent to myself and two brothers.

it depends. if you and your brothers were the named the primary beneficiaries, 1099s should have been issued to each. however, if they were contingent beneficiaries (meaning you were no longer alive) then it was only you that was entitled to receive the annuity so the 1099 is correct and you would report 100% on your return. you may need to file a gift tax return, form 709, if the amount you gifted to either brother was over $16,000.  

on the other hand, if his estate was the beneficiary then you shouldn't have gotten the money directly. if should have gone to the estate and from there it could be distributed in accordance with the will or trust documents.

It there was a named primary or contingent beneficary(ies)  other than his estate it should not have been reported on the trust income tax return.