A return will be filed for your sister as her final return with the social security income and the 1099-R in her name. This should represent the only income she received before she died.
You will amend your tax return to include any income from the 1041-K1.
Since you did obtain and EIN for her estate, you should file a Form 1041 since there is income of $600 or more for the estate. This return is where you will deduct any allowable expenses
- On an estate income tax return (IRS Form 1041), you can deduct necessary administrative expenses, including legal fees, accountant/return preparer fees, executor commissions, and court probate costs. Examples:
- Professional Fees: Attorney, accountant, and tax preparer fees for preparing Form 1041.
- Fiduciary Fees: Commissions paid to the executor, administrator, or trustee.
- Administrative/Probate Costs: Court filing fees, inventory fees, and appraiser fees.
- Property Maintenance: Costs to maintain, conserve, or manage estate assets (e.g., insurance, upkeep on a rental property before sale).
- IRS Form 1041 Instructions
If you want to avoid filing an estate return, and the Form 1099-R is the only income for the estate you can choose to nominee that income from the estate to yourself since you are the only beneficiary. In this situation the expenses would not be allowed on your personal return.
Nominee Returns. This is how the IRS knows what you are doing.
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 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 your sister's estate as the payer and you, as the recipient. On Form 1096, list sister's estate 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 (use the form(s) needed) so if you don't have a color printer, go to the IRS website to fill in and print the forms here: :
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