My sons receive SSI benefits. This year they also inherited money. Can Turbo Tax help me file for my sons?

[DoninGA]

A cash inheritance is not reported on a federal tax return.  Were they a beneficiary on a retirement account/annuity, stocks/bonds or other type of investment account?
If their Social Security benefits were the only income they received, they do not have to file a tax return.

[roe0]

Yes, they were beneficiaries of a 401k. 17k each.

[SweetieJean]

Are they minors? If so, did the 401(k) money go directly to them?
If they are getting Supplemental Security Income, please notify the SSA.

[DoninGA]

SSI - Supplemental Security Income (SSI) is a Federal income supplement program funded by general tax revenues (not Social Security taxes): It is designed to help aged, blind, and disabled people, who have little or no income; and. It provides cash to meet basic needs for food, clothing, and shelter.
SSI is not Survivors/Retirement/Disability benefits received from the Social Security Administration and which are reported on a SSA-1099

[roe0]

Thank you. I am incorrect. My boys receive survivor benefits not SSI. That correction will be helpful as is this info. Tax accnt wanted $500 to file Estate Tax and for each of my sons. My IRS research says estate tax not necessary as benefit was under 5 million. Any thoughts on that?

[DoninGA]

There are no Estate/Inheritance taxes on a federal tax return.  Your state may have an inheritance tax.  What state and was this what the tax accountant was referring to?

[TaxGuyBill]

Also be aware that there is both an Estate INCOME Tax (Form 1041) and then the Estate Tax (Form 706).  However, they both apply to the person that died, not to the people that receive the inheritance.

The Form 706 is usually not necessary (over $5,000,000 in assets), but Form 1041 very often is necessary.  But again, those apply to the person that died, not to the people that receive the inheritance.

[roe0]

This is in the state of Florida.

[DoninGA · Accepted solution]

You will need to file a tax return for each child to report the income as a beneficiary of the 401k.  A Form 1099-R will be issued by the retirement fund administrator by the end of January or early February for the distribution.  They will also have to report the Social Security benefits reported on a SSA-1099 on their tax returns.  Assuming that you will be claiming them as your dependents, on their tax returns they would indicate that they can be claimed as a dependent on someone else's return.

Since you will be completing multiple tax returns, I would suggest you use one of the desktop CD/Download editions.  You can complete as many tax returns as needed with the desktop editions without charge, whereas the online editions are only good for one tax return per account and user ID.  Go to this TurboTax website for the desktop CD/Download editions - https://turbotax.intuit.com/personal-taxes/cd-download/

To enter a form 1099-R

• Click on Federal Taxes (Personal using Home and Business)
• Click on Wages and Income (Personal Income using Home and Business)
• Click on I'll choose what I work on (if shown)
• Scroll down to Retirement Plans and Social Security
• On IRA, 401(k), Pension Plan Withdrawals (1099-R), click the start or update button

To enter Social Security benefits reported on form SSA-1099

• Click on Federal Taxes (Personal using Home and Business)
• Click on Wages and Income (Personal Income using Home and Business)
• Click on I'll choose what I work on (if shown)
• Scroll down to Retirement Plans and Social Security
• On Social Security (SSA-1099, RRB-1099), click the start or update button