1099-R to a minor on death of her mom and her 401K distribution as part of inheritance

[Deepwater850]

In May of 2020 my sister passed away. She left a minor child who I am guardian of. My sisters 401K was distributed as part of Probate to my niece. I have a 1099-R to my niece in which there is gross distribution and taxable amount (less than $6000) and looks like about 20% Federal income Tax withheld.  I was claiming my niece on my Tax Return as a dependent as i have had her for 7 months but am wondering do I need to file a separate tax return for my niece for this 1099-R? or what do i need to do with the 1099-R?

[VolvoGirl]

Yes you should file a tax return for her.  She can get the withholding back.  

Online is only good for one return per account. But you can use the same email address for 5 accounts.

How to start a new online return
https://ttlc.intuit.com/community/using-turbotax/help/how-do-i-start-another-return-in-turbotax-onli...

[Opus 17]

I'm sorry for your misfortune. 

Income in a child's name is almost never added to the tax return of a parent or guardian, the child must file a return in their own name.  This will not change the fact that they are your dependent.

However, this income may be subject to the "kiddie tax".  This is a tax assessed on investments in the name of a child, to prevent parents from avoiding taxes by placing investments in the child's name.  It usually applies to regular investment accounts, but I think it will also apply to this income (I can't find an exception).  The child probably had the option of rolling the money over to an "inherited IRA" and withdrawing it later.  Taking it as cash now may trigger the "kiddie tax."

This tax applies to a child under age 18 as long as at least one parent is alive.  If the father is alive, this tax will apply, even if he is estranged and has no parental rights.  (Unfortunately, the law was not written with exceptions for such cases.)  Turbotax may ask for the income of the child's parents.  This does not mean you as guardian, it literally means the biological or adoptive parents only.  (If you have adopted the child, use your income.)  If you don't have contact with the child's father, you are allowed to make a reasonable estimate of his income.  

If both parents are deceased, the Kiddie Tax won't be assessed once you report that fact in the program.

Good luck. 

https://www.irs.gov/taxtopics/tc553

https://ttlc.intuit.com/community/income/help/what-is-the-kiddie-tax/00/25913

[Tnoble]

I’m in the same boat 

my son lost his dad and he got his thrift savings. So I file taxes for him and I can still claim him in my taxes? My sons 1099r they took out $6,000 for federal and $0 for state. 
What do I do?  I’m confused. 

[Opus 17]

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@Tnoble wrote:

I’m in the same boat 

my son lost his dad and he got his thrift savings. So I file taxes for him and I can still claim him in my taxes? My sons 1099r they took out $6,000 for federal and $0 for state. 
What do I do?  I’m confused. 

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Income paid to a child is only reported on a tax return in the child's name, it can't be added to a parent's return. This does not usually change the fact that you claim the child as a dependent on your tax return.  When preparing the child's tax return, make sure to answer "yes" to the question, "can this person be claimed as a dependent by someone else?"

To prepare someone else's return in Turbotax Online, you would need a separate online account with a separate user name and password.  Each online account can only prepare one return for one person.