My father passed away in 2019 and I was a beneficiary on his TD Ameritrade account. TD Ameritrade opened individual accounts for all 4 of my siblings (including me) and distributed the funds equally to all of our accounts. I decided to withdraw the funds and taxes were not withheld so I assumed I would get a 1099-R.
I log in to my account and it states that my account will not be getting a 1099-R or a consolidated 1099 form because my account had no reportable activity. I understand I must report the withdraw amount but where in turbotax do I enter this information? Since I do not have a 1099 form I am confused about what to do.
This is the message I received from TD Ameritrade:
There was not any account activity to generate a 1099. Since this is a taxable account and no trades were placed the withdraw from the account was not enough to generate any 1099. If this however was an IRA account or retirement account then the withdraw would have generated a 1099.
I am so confused! If it is not a retirement account where am I supposed to report the income.
Don't be confused.
For a taxable account there is nothing to report when you take out cash.
An inheritance is not taxable, unless it is a tax-deferred account i.e. IRA. On that you pay tax when you take a distribution.
Also, the transfer of your portion of these funds to an account in your name was not a reportable transfer.
Your question is a bit odd.
If this was not a qualified retirement account, then it was a simple stock market brokerage account. In that case, you inherited the account at the present value as of the day your father died. If you cashed it out immediately, you would have no taxable gain or loss. If you cashed it out later, you may have had a taxable gain or deductible loss, and you may have received dividends. I would expect the broker to have sent you a 1099-DIV, a 1099-B and possibly a 1099-INT for the year in which you cashed out the account.
Maybe they put the money in a simple money market fund, and you withdrew it so fast that it didn't earn interest?
Yes, the day that TD Ameritrade distributed the funds I immediately withdrew them because I planned on closing the account anyway. My father's original account had been cashed out and he had not invested or was using the funds. So they told me they were going to distribute the funds so the tax burden would be not as high.
I assumed this meant it worked the same way as a retirement account but I understand that this is not the case since it is not an IRA or retirement account. I think that is why I was confused about getting the 1099.
Since I took out the funds right away it never had a chance to earn interest. I did leave the account open but there is no balance.