1099R For Deceased Person

[syoung123]

Hello, my wife’s mother passed away in late 2019, and the estate was settled since.  My wife’s mother had a traditional IRA account that was inherited by my wife, and the name/SSN were changed to my wife’s as inherited IRA (account description “mother name Deceased IRA FBO my wife name”).  My wife has been getting a 1099R for the required minimum distribution (RMD) every year.  In early 2024, my wife received a check issued to her mother’s name for about $17, and the description is “trade processing fee rebate” from the brokerage firm.  She has not done anything with it since the check has her mother’s name and all her accounts were closed years ago.  Now my wife just received a 1099R issued to her mother’s name and social security number for about $20 from the brokerage firm, with federal and state tax withholdings that net to $17, the amount on the check that she received in early 204.  The 1099R shows code “7” distribution code with IRA/SEP/Simple box “checked”.

1. What do we need to do with the 1099R?  The 1099R shows her mother’s name and social security number.  It does not belong to my wife for our income tax reporting.  Tax year 2019 was the last year that we filed the deceased return of her mother.
2. Is my wife, who was the executor of her mother’s estate, responsible to do anything at this point? 
3. What does my wife do with the check that is in her mother’s name?  All her mother’s accounts were closed years ago.

[DianeW777]

The 1099-R income is required to be reported on your tax return since it actually does belong to your wife. The amount may have no tax affect for your joint  tax return. The answer to your questions follow (see the last paragraph also):

1. Report the 1099-R as though it was in the name and social security number of your wife.
2. Yes, the income should be reported on her personal income tax return as indicated in 1. above.
   • Only she has the right to the income, even if the check remains uncashed.
3. My advice would be to request a reissue.  The check could be reissued in your wife's name with the death certificate and possibly other documentation presented to the company who issue it. 

The fact that is is $20 or less may have no affect on your tax liability.  In the end if that's the case you can just keep it in your tax files and don't put it on at all.  Add an extra $20 to any income to see if the tax on your return changes at all. It could but highly unlikely.

[syoung123]

Thank you for the reply.  I am not clear on why the 1099R income belongs to my wife.  The check was issued to her deceased mother's name, and the 1099R was issued to her mother name and SSN with FIT and state taxes withheld.  If we include the 1099R on our tax return,  we will have to send the 1099R to IRS since FIT was withheld, and the 1099R won't match with our SSNs since it has her mother's SSN on it.  Wouldn't it create more questions and confusion?

Our wife asked the brokerage firm about the check and 1099R since my last post.  The brokerage firm asked her to send them her mother's death certificate so they can make the correction.  I don't know what correction that they are going to make.  Hopefully they won't make it the correction for tax year 2024.  Would it be too late for them to do it for 2024?

[DianeW777]

No, it's not too late and it will be for 2024.  I would advise to wait for the corrected form.  However, if you choose, you can file your return without it and when it comes you can amend.  It sounds like the federal tax must be quite small since the overall amount was $20 or less, as indicated it may not change your return at all with the exception of possibly having a refund of the federal tax withholding.

Essentially it will depend on where your taxable income falls.  The tax tables change every $50 of income usually.

• IRS Tax Tables 2024

[syoung123]

Hello, so in the event that the brokerage does not make the correction for tax year 2024 and makes the correction to issue the check to my wife for tax year 2025, that would be considered as 2025 event, and I don't have the report this distribution for tax year 2024, because the distribution would be made in 2025 and the corresponding 1099R will be issued for tax year 2025?

I guess it would depend on what the brokerage firm decides to do?  My wife has not sent them the death certificate and we have not heard from them regarding what they plan to do.

[DianeW777 · Accepted solution]

It's not likely the brokerage will change the reporting tax year of the distribution, although unknown.  It's possible they will decide the money never left their account and the re-issue would occur in 2025.  

You can wait for their action once the steps are put in place by your spouse. 

@syoung123