My mother died in 2022..
I was payable-on-death beneficiary of her bank account.
All funds were withdrawn from bank in Oct 2022.
1099-INT with her Social Security number shows interest for 2022 was $87.
$10 of interest was credited after she died.
My understanding is that $77 is taxable to my mother.
$10 is known as “income in respect of a decedent” and is taxable to me.
QUESTIONS:
(1) If I add $77 to her return and $10 to my return, the amounts won’t match the 1099-INT information received by IRS for each of us. Do I need to send two letters to IRS explaining why the numbers on each return don’t match the information received by IRS ? How do I send the letters if I file returns using TurboTax?
(2) For simplicity, would it be OK to add the entire $87 in interest to my mother's return because the 1099-INT shows only her Social Security number?
I am sorry for your loss.
1) The method technically used for this scenario is to report the entire amount of interest on your mother's final return and then report the interest earned after she passed as a nominee (which amount would be subtracted from the total and reported on your return or the estate's return).
2) Since this is such a small amount of interest ($10), it would probably be fine to simply report the total on her return.
Yes, for simplicity, enter the 1099-INT on her tax return as shown. The income was reported in her name and social security number and effectively belongs on her final return.
Condolences for your loss.
I am sorry for your loss.
1) The method technically used for this scenario is to report the entire amount of interest on your mother's final return and then report the interest earned after she passed as a nominee (which amount would be subtracted from the total and reported on your return or the estate's return).
2) Since this is such a small amount of interest ($10), it would probably be fine to simply report the total on her return.