Deceased father got some 1099-Div

[John1204]

My father passed away in Dec 2020 I filed his final tax for 2020. Question is in regards to dividend income in 2021, before several accounts were moved about.

It took until April 2021 to set up the new account at the brokerage to move the Trust assets from my father's Trust account. The new account is still his Trust but I am trustee and it has a new Tax ID number. His Trust account had some paid dividends prior to the transfer. The brokerage prepared 2 1099-Div, one for each account, but one for Jan -April timeframe is under my father's SSN

Additionally, The same thing happened with several drip accounts that would have needed to go to an estate account and TIN since they were not held in the trust and had to be probated, but actually all the Dividends were paid to his SSN.

I understand I need to file 3 taxes, 1041 for trust with K1 to me, 1041 for estate with K1 to me and of course my taxes. I'm just not sure how to account for the 1099's in his name and SSN, it is about $17k total in taxable dividends.

[GeorgeM777]

It appears you may have to amend your father's final return.  According to the IRS, if an amended Form 1041 must be filed, use a copy of the form for the appropriate year and check the “Amended return” box. Complete the entire return, correct the appropriate lines with the new information, and refigure the tax liability.  On an attached sheet, explain the reason for the changes and identify the lines and amounts changed.

If the amended return results in a change to income, or a change in distribution of any income or other information provided to a beneficiary, an amended Schedule K-1 (Form 1041) must be filed with Form 1041 and a copy given to each beneficiary. Check the “Amended K-1” box at the top of Schedule K-1 (Form 1041).

@John1204

[John1204]

Hi George, thanks for the response. I'm a little confused. Maybe I was overexplaining the issue.  I did file his 1040 for 2020 and marked it as final. I'm referring here to income received in 2021 under his SSN and not the TIN of the Trust or Estate that probably should have received it. Do I just contact the various companies and see if they can resend a corrected 1099? I spoke to Schwab and the guy I spoke to there just said to talk to my tax person. 

[ThomasM125]

The companies will probably not agree to reissue the 1099 form, but you can ask. 

If there is an estate set up for the deceased, then you would report the income on the estate tax return. If there is no estate and the money ended up in the hands of a beneficiary, then you would report it on that person's tax return.

The IRS won't look for a tax return for the deceased, since you filed the final return and they should have noted that. So, the W-2 filed with the deceased tax ID should not prompt the IRS to request a tax return from the deceased.

[John1204]

Thanks very much Thomas,

Ok, I am sole beneficiary anyway. There is an estate and trust, he had some stock held in his name not the Trust and it exceeded the limits for probate. But I guess my question is since the money was paid and noted on a 1099 to his SSN. How do I enter it into the tax return for the Estate, trust or me. I understand ultimately I owe any taxes, just trying to have the correct paper trail for the IRS. Meaning would I just enter it on the estate return even though it was issued to him.

[DianeW777]

The process for including the income issued in your deceased father's social security number (SSN) is simple.  You can simply nominee the amount to the trust EIN by following the steps below. This will complete the correct paper trail for the IRS.

Nominee returns. 

Generally, if you receive a Form 1099 for amounts that actually belong to another person or entity, you are considered a nominee recipient. You must file a Form 1099 with the IRS (the same type of Form 1099 you received).  You must also furnish a Form 1099 to each of the other owners. 

File the new Form 1099 with Form 1096 (this is a transmittal for the 1099) by mailing to the Internal Revenue Service Center for your area. (Provided on the Form 1096)

• On each new Form 1099, list yourself as the payer and the other owner, as the recipient. On Form 1096, list yourself as the nominee filer, not the original payer.  The nominee is responsible for filing the subsequent Forms 1099 to show the amount allocable to each owner. 

If you choose this one here is the TurboTax program for creating 1099s.

The forms filed with the IRS should be the red copy so if you don't have a color printer, go to the IRS website and order the forms here: 

• Form 1096-Transmittal
• Form 1099-DIV

[Yannie]

Hi,

Came across this discussion and it is very similar to our issue.  My father passed on Dec. 16, 2020.  I filed his final tax also in 2020.  Received dividend income in 2021 for first quarter dividends with his SSN # (it was a joint account with my mother).  All subsequent dividends were made to my mother's new account.

I took your advice to "simply nominee the amount" as Ameritrade would not provide a corrected 1099-div.

I ordered the forms from the IRS (1096 and 1099-Div) and received it today.  I read the instructions and completed the forms (to move the dividends from my father's SSN to my mother's SSN) but then read the deadline to file these forms by mail was Feb. 28, 2022.  I looked into the 30 day extension form 8809 but that too needed to be filed by Feb. 28, 2022.  What do I do now?  Do I just send in the 1096 and 1099-Div and hope for the best?

Thanks in advance for your help.

Sharon

[PattiF]

Yes, you should send in the forms now. No need to worry. The IRS is more understanding about individuals not meeting a filing deadline, that they are for businesses that don't meet the filing deadline.

[Yannie]

Thank you PattiF.  That's good to know, I shall send it off tomorrow.

[wp6410]

His final return is a 1040, not a 1041. The 1041 is for the estate. If the dividend accrued after his death they cannot go onto the 1040{ammended}.

You can try to have to e the financial institution change the TIN. Though the IRS 1041 states that the estate TIN "MUST be used." The Merrill Lynch broker for my mother's estate says they can't... He says that for everything.

Solutions I've been given all include the divends should be recorded on the estate's income(1041).

1. Just do it and respond if it's questioned by the IRS 

2. Send an explanation with the return 

3. Create a 1099-div from your father's name/soc number to the estate/TIN as payeewith a 1096. No one knows what will happen since SSN is inactive, then the original was sent to an inactive SSN. (this would be the method if the original payee were filing. You would then record the 1099 with adjustment: Nominal.) 

[BobF4141]

Unfortunately, from recent experience, brokerages will NOT re-issue a current year 1099 due to their misreporting under a SS# for a taxpayer who died the previous tax year, even when they've known the date of death for months.  If the account went to an estate, I've had CPAs tell me to just report it on the estate return.  If the IRS questions it, write a letter and explain.  Most investment companies will report under the deceased's SS# until the date the account is transferred to the estate, a TOD beneficiary, or trust.  If there are multiple beneficiaries of the account which are transferred at separate dates, they will continue to report the un-transferred portion under the SS# until it is transferred. They simply do not care and according to FINRA, they aren't required to correct a 1099 incorrectly reported that way.  Companies that issue K-1 packages for PTP (publicly traded ptshps) are sometimes more accommodating, if you catch the error before they file the final partnership or LLC return to the IRS. 

 I am dealing with a situation very similar to yours, but with multiple brokerage accounts some of which hold PTPs, multiple TOD beneficiaries, a probate estate, a trust and different transfer dates for each. The only saving grace is the death occurred on the last day of 2020 and no need to allocate income pre- & post-death for 2020.