Estate 1041 Tax Return

[CathyM03]

My dad passed away October 2023 but we had two accounts that stayed active until mid 2024.  I filed his taxes at the end of 2023 thinking that would be the last and any new income would be placed on our 1099 but it was recorded in his name.  So I just completed the 1041 for his estate, but I am confused about the Schedule K-1and the Schedule B Income Distribution Deduction Section.  Is the Schedule K-1 and the Schedule B only used if you record the income on your own 1040 and since we did not, I just enter zeros in that section so the full amount will be taxed on his 1041 Estate Return.  Should I include Schedule K-1 with my return even if that section contains zeros?  Thank you for any help you can provide.  

[DianeW777]

It depends. If you paid the tax with the estate tax return (Form 1041) then it's not necessary to include the income on the K1. If your K1 shows no income, then there is nothing to report on your tax return. You wouldn't keep filing this form is the income accounts have been transferred to the beneficiaries.

Another option would be to change the 1099 name to the name of the beneficiaries and report it on the individual return. See the information below (use the 1099 that applies to you if you choose to do this. At the very least it should be done in the future.

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 dad as the payer and the other owner, as the recipient. On Form 1096, list your dad 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: : 

• Form 1096
• Form 1099-INT
• Form 1099-DIV
• Form 1099-S
• Form 1099-B