Retirement tax questions

It depends on whose name is on the 1099-R. If only one 1099-R was issued for the entire amount that was split between the four beneficiaries, nominee forms will need to be filed.

Assuming that the 1099-R is in your name, you would file a 1099-R form with the IRS showing who actually received the payment. You are the Nominee in this situation and you name who received the payment. Then, when you file your return, you show all of the income in your return. Then you will back out  the beneficiaries shares as “nominee amount.” Thus only your portion of the income is included in your taxable income.

To back out of the payment, use a negative income adjustment following these instructions.

You can enter a negative income adjustment with the following menu path:

1. Federal Taxes
2. Wages & Income
3. Less Common Income
4. Miscellaneous Income
5. Start
6. Other Reportable Income
7. Start
8. Other Taxable Income
9. Description = “Distribution to Nominee YYY, SSN xxx-xx-xxxx”
10. Amount = -$xxx

Then you will send the nominee form to the IRS.

Nominee Actions/Returns:

Generally, if you receive a Form 1099 for amounts that actually belong to another person or entity, you are considered a nominee recipient. You must file a Form 1099 with the IRS (the same type of Form 1099 you received).  You must also furnish a Form 1099 to each of the other owners. 

File the new Form 1099-R with Form 1096 (this is a transmittal for the 1099) by mailing to the Internal Revenue Service Center for your area. (Provided on the Form 1096)

• On each new Form 1099, list yourself or the original Payee as the payer and the other owner, as the recipient. On Form 1096, list yourself or the original Payee as the nominee filer, not the original payer.  The nominee is responsible for filing the subsequent Forms 1099 to show the amount allocable to each owner.

The forms filed with the IRS should be the red copy so if you don't have a color printer, go to the IRS website and order the forms there.

Split the amount as needed and enter only the necessary portions on the appropriate returns.