1099-R and how to handle it

[ams245]

My sister passed away last year, leaving her retirement money in her account in the amount of $26K.  In her Will she had requested that as her executor,  I contribute 1/2 of that money to a couple of charities she designated, which I did in 2019.  That means that 13K was contributed as charitable donations and 13K was mine to keep.  However, I received a 1099-R in my name in the amount of $26K which from the IRS perspective means, I believe, that I'm responsible for taxes on that amount since the total amount was signed over to me personally by her Credit Union where the account was held.  Claiming the contributed $13K  as a deduction doesn't reduce my taxes hardly at all!  What is the best way to handle this so that I'm not having to pay taxes on $26K.  I'm happy to pay taxes on the $13K, but not the full $26K if it's at all possible.

[MaryK4]

Unfortunately, if you were the beneficiary, you will not be able to avoid the tax on the Charitable Contributions.  Her estate should have been the beneficiary or the tax should have been paid before the charitable deductions were made.  I am sorry for your loss.

[ams245]

Thank you for your response.  Can I file a separate tax return on the retirement money I received upon my sisters death separate from my own return so it doesn't impact the refund I would receive if I just entered my own income and donations?  I would still owe taxes on the IRA money but at least it wouldn't reduce my own refund.

Thank you,

Anne Marie

[DaveF1006 · Accepted solution]

No !! You can only file one return per social security number per year. You can postpone filing the 1099R you received upon your sister's death and amend your original tax return for the year. This way you can receive your refund from the original return. 

The only problem with filing the amendment is, if you owe money because of the distribution and if you file after April 15, you may owe penalties for late filing and interest