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POD Beneficiary Claim

cookiesandcream18 — Thu, 06 Jun 2019 08:20:57 GMT

My mom passed away this summer and left her kids including me the money she has accumulated in 2 banks, equally divided. It was not from 401K or IRA accounts. The amount of money is several thousand dollars. I submitted the beneficiary POD claim at the bank and received the money after a few weeks. I received a 1099-INT form from the bank for $10.74 which I assume is the interest gained between her death and me getting the $ but have no 1099 or tax forms from the bank for the several thousands of $. Do I need to pay taxes on the several thousand dollars I received or just the $10.74 interest I received. Thanks

You only need to pay income tax on the interest received....

jtax — Thu, 06 Jun 2019 08:20:59 GMT

You only need to pay income tax on the interest received.

Gifts are not taxable. Inheritances are gifts.

https://www.law.cornell.edu/uscode/text/26/102

26 U.S. Code § 102 - Gifts and inheritances

(a)General rule

Gross income does not include the value of property acquired by gift, bequest, devise, or inheritance.

Thank you

cookiesandcream18 — Thu, 06 Jun 2019 08:21:00 GMT

Thank you

Re: Thank you

myTax — Sun, 03 Nov 2019 20:09:49 GMT

Should 1099-INT form, from the bank for $10.74 be reported as interest under her mom's estate and not hers ? (not on the beneficially 1040 income tax return)

2) Does POD bank account bypasses estate account altogether and becomes owned by the beneficially immediately after owner's death since it avoids probate ?

My mother passed away this summer as well.

Re: Thank you

macuser_22 — Sun, 03 Nov 2019 20:30:58 GMT

@myTax wrote:

Should 1099-INT form, from the bank for $10.74 be reported as interest under her mom's estate and not hers ? (not on the beneficially 1040 income tax return)

2) Does POD bank account bypasses estate account altogether and becomes owned by the beneficially immediately after owner's death since it avoids probate ?

My mother passed away this summer as well.

Interest paid prior to the date if death is the account owners interest and goes on the deceased final tax return. Interest paid after the date of death is the estates or beneficiary of the account (if the bank account was a joint account or had a named benificuary) and goes on the estate or beneficiaries tax return.

Re: Thank you

myTax — Mon, 04 Nov 2019 01:59:04 GMT

Thank you for the quick reply.

As a follow up question, --> Interest paid after the date of death is the estates or beneficiary of the account (if the bank account was a joint account or had a named benificuary) and goes on the estate or beneficiaries tax return.

Assuming that bank POD account named her as beneficiary,

Does this mean that she get to "choose" if, $10.74 be reported as interest under her mom's estate (mom's 1041 estate tax return) or hers ? (her own individual 1040 tax return)

Re: Thank you

macuser_22 — Mon, 04 Nov 2019 02:15:04 GMT

@myTax wrote:

Does this mean that she get to "choose" if, $10.74 be reported as interest under her mom's estate (mom's 1041 estate tax return) or hers ? (her own individual 1040 tax return)

No, If there was a benificuary of the account then the estate has nothing to do with it. It either goes on Mom's final tax return or the beneficiaries, depending if the interest was paid before death or after (or some of each in which case it would be prorated. (For $10.74 I would not worry about where it is reported - if thousands of dollars then it would make a difference.)

Re: Thank you

myTax — Mon, 04 Nov 2019 03:25:38 GMT

Thank you again,

So to make sure I understand this,

For POD bank account naming her as beneficiary,

1) interest was paid before death, ( $10.74 ) report it on mom's 1040 individual tax return

2) interest was paid after death, ( $10.74 ) report it on her 1040 individual tax return

3) in either case, 1041 fiduciary return is NOT required ( no estate exists )

4) This is true for interest greater than $600 or if interest in the amount of thousands of dollars are paid

Is this correct ?

Re: Thank you

macuser_22 — Mon, 04 Nov 2019 04:41:53 GMT

@myTax wrote:

Thank you again,

So to make sure I understand this,

For POD bank account naming her as beneficiary,

1) interest was paid before death, ( $10.74 ) report it on mom's 1040 individual tax return

2) interest was paid after death, ( $10.74 ) report it on her 1040 individual tax return

3) in either case, 1041 fiduciary return is NOT required ( no estate exists )

4) This is true for interest greater than $600 or if interest in the amount of thousands of dollars are paid

Is this correct ?

#1 & 2 if the total years interest was $10.74 then only the part if that that was prior to death would go on mom's tax return and the part paid after death on the beneficiaries return, but for that amount of interest, just report it to whose SSN is on the 1099-INT that reports the interest. If the 1099-INT is in Mon's name and SSN then report the entire amount on her final tax return. It is simply not worth prorating (and explaining with nominee elections) for such a small amount.

#3 If the bank account passed directly to the beneficiary then the estate is not involved at all.

#4 Any amount.