POD RULES REGARDING AFTER DEATH ACCRUED PAYMENTS

[cathyt2015]

I am currently using 2022 TT Deluxe to do my own tax return and the final tax return of my deceased sister. 

Before her death, my sister made sure that every one of her financial institutions had a POD beneficiary.  She felt that this would make the transfer of funds easier for me, since I was both her personal representative and the beneficiary on all of her accounts with the exception of two IRA accounts.  She had a trust that contained everything else.  I am the trustee of that trust.  My question only involves the accounts I inherited from financial institutions.

Despite my best efforts, it took up to 2.5 months for insurance and financial institutions to turn over my inheritance to me.  When my sister’s 2022 1099s arrived, they included amounts earned from her date of death to the date that my inheritance was turned over to me as the POD beneficiary on these accounts.

1. A. I read that on her final personal 1040 return, my sister should only have be taxed on amounts until her date of death, which was on a Sunday on the last day of a month. It said the taxes on after-death earnings are the responsibility of the beneficiary if they were included on the decedent’s 1099s.  Does this apply to POD account beneficiaries or only to beneficiaries named in wills or trusts?
2. B. I originally thought that, in my role as personal representative and Trustee of the funds to be used to pay my sister’s taxes, all I needed to do was provide each POD beneficiary with a certified death certificate for the decedent, and, after that, it was the responsibility of the beneficiary to move forward and collect the inheritance. I did not think I had to follow up to see if they actually collected their inheritance.  Is this true?
3. C. I lived with my sister and was the sole beneficiary on all of her insurance and financial accounts other than the aforementioned IRA accounts.  If I must add back all after-death payments to my own tax form individually, it would be an extremely arduous task. I can see from brokerage statements that many payments were made to my sister’s accounts between her Date of Death and the accounts actually being put into my name. In one case, that would include 144 individual dividend payments in addition to many separate interest and other payments indicated on the same statement.  Can all of the individual amounts for each category (ie. Interest, Dividends, etc.) regardless of the name of the specific institution that held them, be added together?  By way of example, could I add up all after-death bank and brokerage interest together and subtract one lump sum from my sister’s total interest and add the same lump sum to my interest with some sort of written explanation?  If not, can I at least present the total for each institution rather than listing each small amount separately.  Are these considered adjustments?
4. D. Do I include a short explanation of the subtraction or addition on the appropriate form?  I would think that the IRS would like the social security number and possibly other information for the beneficiary (me, in this case) to cross-reference the beneficiary’s return.  Aside from dividends and interest, I also will be dealing with 1099-B proceeds and 1099-OIDs and need to enter them somewhere as well.  Where would that be?  What do I call myself in these instances?  Would the IRS and Turbo Tax consider me a “nominee” since I was nominated as a POD beneficiary or do I have another title?
5. E. Finally, I read something that said that I would have to give 1099s to POD beneficiaries if after-death income is to be included on their own individual returns.  Is this true?  How can this be handled in my case?  I would have to give myself over 30 1099s.  I have no problem adding the payments received to my own 1040 if I must.  I just want to know if there is a simpler way of doing so.  Must I give 1099s to myself? Would these 1099s also have to be sent to the IRS or does Turbo Tax have a different option? 

Thank you for your kind consideration.

[Cynthiad66]

Please accept my condolences.  You have quite a few questions and hopefully this will address them.

I did not think I had to follow up to see if they actually collected their inheritance.  Is this true? This question is a little outside of our scope, however, the trustee acts as the legal owner of trust assets, and is responsible for handling any of the assets held in trust, tax filings for the trust, and distributing the assets according to the terms of the trust.

Can all of the individual amounts for each category (ie. Interest, Dividends, etc.) regardless of the name of the specific institution that held them, be added together?   Yes.  exactly as you explained.  However, if you can do it by each institution it would appear more accurate to the IRS as they do matches by company EIN and Your Social security numbers.

1099s and1099-OIDs and need to enter them somewhere as well.  Where would that be?   Under Federal Taxes, select Wages & Income. Under Interest and Dividends, click Show More. Under 1099-OID, Foreign Accounts, click Start.

Would the IRS and Turbo Tax consider me a “nominee” since I was nominated as a POD beneficiary or do I have another title?  Generally, if you receive a Form 1099 for amounts that actually belong to another person or entity, you are considered a nominee recipient.

Must I give 1099s to myself? No.

Would these 1099s also have to be sent to the IRS or does Turbo Tax have a different option? If they had to be issued, then yes IRS must receive copies.

See the article below, it will answer most of your questions.

Estates and Trusts Questions and Answers