My mother died in November. of 2024. Because OPM "didn't get the memo", they deposited her pension on Dec 1 2024 and Jan 1, 2025. She was not entitled to either of those payments. Her bank account was debited for those two payments in late January of 2025. The January 2025 payment received and sent back will be a wash. HOWEVER, that received in 2024 was not "paid back" until 2025. The 2024 1099R received showed her pension for 12 months. She was alive only 11 and not entitled to the 12th, and it was returned, just not in the physical year of 2024.
If I claim 11 months of income, it will not match her 1099 for 2024. I see no way around reporting 12 months because it was actually received in 2024. But what about it being taken back in 2025 and the fact that her income will be too high and a liability for tax for 2024 and reflected on her 2024 return? I can't claim negative income in 2025 to get any of that liability reversed or get any taxes back, and a 1040 x would not do, because claiming that income will already match the 1099R received - plus a revised 1099R would not be issued because the money WAS received.
Also, there was a small amount of federal withholding on that money - so the 1099R shows she paid in more federal taxes than she did once the payment was reversed out. That will be a discrepancy, and I don't want a bill for the tax back on that if I file to match the 1099R.
I've read lots of IRS pubs on this, and of course, it is not addressed. The estate is less than 30K, so there will be no estate taxes or ongoing estate tax returns. Everything will be distributed before April.
