Decedent received 1099-INT from the IRS to their SSN two years after passing

[kmd]

Decedent received a very late IRS refund plus interest for 2019 in 2022.  This generated a 1099-INT for $289 from the IRS.  I am trustee and already filed a final 1041.  So, that amount was directed to the decedent's SSN.

Secondly, a forgotten bank account generated a 1099-INT of $373 directed to the decedent's trust's EIN.

Since each of these is less than $600, can I simply not do another 1041 and ignore this interest?  I read somewhere that if the total does not exceed $600, I don't have to do a 1041?  Individually, they do not, and each is paid to a different taxi ID (SSN and EIN, respectively).  But then again, the amounts were deposited into a bank account under the trust EIN for distribution to beneficiaries as I still had an account open under the EIN.

How to handle this?  Furthermore, the final 1041 was had both decedent and complex trust checked as I made the 645 election to avoid estimates and extend the due date of the final 1041 form.  This way I only had to do one 1041....I didn't expect these two 1099-INT items.  There will be no more of them, for sure.

Thank you for any advice.

[tagteam · Accepted solution]

You should be able to handle this as IRD (income in respect of a decedent) given the small amounts.

Whoever receives the income reports that income on their return.

[kmd]

So then no need for yet another 1041 and K-1s?  I hope not because I filed the final as both decedent and complex trust and also took the section 645 election to use a fiscal year and minimize the number of trusts.  There was actually no estate - all funds were in the trust.  I just did this to minimize 1041s.

But I don't understand - how does the IRS know who is paying taxes on these new 1099-INTs?  How do they figure out whether those 1099-INTs are listed on someone's 1040?  Aren't they going to be looking for the mapping to the SSN beneficiaries in a new 1041, or will they use the previously filed one to figure out where to look for those 1099-INTs?

I've actually done the  1041 and generated the K-1s - it was quite simple.  I'm just worried it will cause more trouble since I already filed a final 1041 and took the section 645.  I'd rather not file and stir things up.  Plus the K-1s were previously listed final, so now I don't want yet another K-1s listed final.  Because then what?  Am I supposed to amend the old 1041 since it wasn't final after all?  Seems like a can of worms and better not to file any more 1041s if possible....right?

Thank you!

[Mike9241]

If the IRS ever inquires you respond by writing back that the decedent's trust was closed at the time the income was received. The heir(s) reported income on their return(s). Or use your own wording pointing out the income has been reported.

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[tagteam]

Mike's correct; simply respond that the income has been reported if there is ever an inquiry.

See https://www.irs.gov/instructions/i1041#en_US_2022_publink1000285932