How do I report a nominee on a 1099-R form from cashing out an insurance policy? The insurance co reported the entire taxable amount under my social

[dgm]

I am asking the insurance co to split the proceeds and send 2 1099-R forms showing the actual taxable amount for both of us, but if they can't how do I do this if it's all reported under my social, when I do my taxes next year?  I would like to verify this on Turbo Tax and do a test with a copy of my taxes from this year (just to test it out).  I say another response regarding nominee for 1099-INT but would like the instructions for a 1099-R.  Also, what do I need to file with the IRS (either paper or online) to designate him as a nominee for the amount of $ that will be sent to him showing his taxable amount?

Thanks

[macuser_22]

Why is it split?      Who's name is the policy in?

[dgm]

The policy is in both me and my brothers name and we are splitting the proceeds 50/50.  But the insurance company indicated they would report the taxable portion under 1 social (me).  They indicated that I fill out some 1099 form designating him as a nominee of the proceeds.  Just need direction on this with regards to the IRS and also when doing my taxes next year.

[Lisa995]

If the check was issued under just your name alone, its doubtful the insurance company will split the 1099R into a 50/50 situation.  It should have been distributed in 2 checks one for your half, the other for your brothers half.

[macuser_22]

I don't know very much about insurance, but how can an insurance policy be in more than one name?  Insurance only insures one person AFAIK.

There can be more than one beneficiary on a policy.     Is it your policy and your brother is your beneficiary?

[dgm]

The insured person on the policy is our Father.  My brother and I are both owners of the whole life policy.  We are cancelling the policy to cash it out.  The insurance company stated they would issue the 1099 under my social thus reporting the whole taxable amount under me.  I have inquired with them that the proceeds be split 50/50 and the 1099R as well so there is no IRS mess.  But they stated that with multi-owners they usually send the proceeds to 1 person even if multiple owners exist and that 1 person then distributes the proceeds accordingly and then is also responsible for informing the IRS of additional nominees of the proceeds as well as who else is responsible for their portions of the taxable amount.   I am trying to avoid that with them and just have it all split from the get go.  But if they can't or won't, I need a backup plan knowing how to nominate my brother for tax purposes.  This is where I am lost.  How do I do that once I receive the 1099R from them and how in Turbo Tax do I indicate a nominee so I am not stuck paying taxes on 100% of what's on the 1099R form.

[macuser_22]

Like I said, I am in over my head here for insurance.

I know of no way to do that when a 1099-R is involved.  The IRS gets a copy form the issuer and expects to see that on your tax return.  There would be nothing on the 1099-R to indicate that anyone but you received the money.

This does not seem right.   How are they paying - one check or two and whose name is the check made out to?

I would think you need to look at the terms of the policy and how the owners are listed - joint owners or "and/or" and how that are to pay each owner.

User @dmertz - any insight here?

[dgm]

We are listed as Joint owners as we both have to sign the documentation regarding the cancelling of the policy.

[Lisa995]

In a professional program I would report the 1099R as is and just make the adjustment on Line 21, with details in an attached preparer electronic statement showing the brothers name and SSN and amount that should be reported by him., then have the brother report his share on Line 21 of his return.  

I'm sure the Line 21 stuff can be done in TurboTax, but as far as attaching a statement and still be able to e-file, I'm not sure TT can do that.

[dgm]

Would this be a similar process to what I need to do?
<a rel="nofollow" target="_blank" href="https://ttlc.intuit.com/questions/3224502?_ans=1&_pos=1&_src=sapi&_tot=172324&from=sapi&tags=">https...>

This is for 1099-INT and it looks like TT can handle this so I would assume it can handle the same for a 1099R?

[dgm]

Thank you Lisa995 and TurboTaxJohn2
I guess my other question is then how do I generate a 1099-MISC statement ?
Is that something generated via the TT program when I file next year and then just send it to my brother or do I also send him a copy of my 1099R just for his records?

[JohnH2]

Lisa995 is correct.  You can show a negative number in Line 21 with the caption, “Distribution to Nominee YYY, SSN xxx-xx-xxxx.”  The negative number on Line 21 will adjust the income of the reported payee to the correct amount.  The reported payee will issue a Form 1099-MISC to the nominee payee for nominee’s share of the distribution. 

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

TurboTax will transfer this to your Form 1040, Line 21, Page 1.

You can e-file with this approach because the disclosure is on the face of the return at Line 21.  Consequently, you do not need to attach a statement.

[diane1349]

What you have to do is use form 1096 to get the IRS to sed you a 1099R to fill out.   I always have to wait on the forms as they usually aren't available yet for the upcoming tax year.

[diane1349]

So here is my question.  As the owner of an annuity that is my daughters money, when I take money out for her I do the 1096/1099 forms.  This transfers it all to her and not to me.  However when she gets the 1099R form from me does she incur penalties when she reports it?  She would be penalized if this was in her social and the payout came direct to her from the annuity company.  I never considered this before....the difference is between 20% and 30% if she's penalized.   

[MidlandBob]

Seems if one receives 1099-R then one would issue a 1099-R (Not MISC) to the Nominees --????...???