1099R issued to estate

[reneeshields]

My father had a pension annuity that had no beneficiary so a lump sum payment was issued to his estate. This was later distributed to me since I was the named beneficiary in his will. 

Federal taxes were taken from the annluity distribution at the rate of 20% and AZ tax at the rate of 2.5%. 

A 1099R was issued under the deceased person's estate. If taxes were paid before the distribution to the estate and this was inherited by my after taxes, will I get a 1099R as well? Is there anything I need to report?

[dmertz · Accepted solution]

No, you won't get a Form 1099-R.  Assuming that the estate passes the income through to you on Schedule K-1 (Form 1041) leaving the estate with no tax liability after taking the DNI deduction, the estate will need to receive the tax refund which the estate can then distribute to you.  The tax withholding shown on the Form 1099-R can only be credited on the estate's income tax return, not on your income tax return.  (The plan should not have withheld taxes distribution.)

Because you cannot be credited with the tax withholding, if the estate uses a tax year ending in 2023, you might end up with a tax underpayment penalty for 2023.  If the estate uses a fiscal tax year and the income will be on a Form 1041 with a tax year ending in 2024, it will be income on your 2024 tax return and you can make tax payments or have enough taxes withheld from other sources to avoid an underpayment penalty on your 2024 tax return.

[Anonymous_]

See https://www.irs.gov/instructions/i1041#en_US_2023_publink1000285990

For exceptions to estimated tax payments.