How to pay tax on after-death Social Security payment obtained using SSA-1724

[jello77]

I’m executor of my uncle’s estate. He had no surviving spouse, child, or parent.

He died in September before his August Social Security benefit was received.

To obtain the August payment on behalf of the estate, I must submit Form SSA-1724.

On the form, I added my name & address as executor.

For direct deposit, I added the estate bank account.

My understanding is that:

—  payment will be issued in name of Estate of John Doe

—  payment will be regarded as “income in respect of a decedent” (IRD)

—  IRD income is normally taxable to the estate.

What confuses me is that Form SSA-1724 does not ask for taxpayer ID number of estate (EIN). It only asks for uncle’s Social Security number.

I know that tax on the payment must be paid. But I don’t understand whether the tax gets paid on uncle’s 1040 return, or on estate’s 1041 tax return.

QUESTIONS:

(1)  Will the after-death payment be included on uncle’s SSA-1099 received in January? 

(2)  If yes, does the final payment get its own 1099 form?  Or will only one 1099 be issued that includes Social Security payments received before and after death?

(2)  If the final payment appears on uncle’s 1099, should I report the payment on his 1040 return and pay tax on it, and then disregard the payment on the estate’s 1041 return? 

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[tagteam]

IRD is reported on the return of the person or entity that receives the income.

[jello77]

Thanks for your response, but I'm still unclear about the situation.

(1)  Am I correct in assuming I should I report the payment on estate's 1041 return and NOT on uncle's 1040?

(2)  Does this mean the payment will NOT be included in uncle's SSA-1099?

(3)  If the payment does appear on uncle's SSA-1099, do I need to subtract the payment on his 1040 return, and then include an explanation that the amount was added to 1041?

[tagteam]

IRD would not be reported on your uncle's 1040.

The tax reporting statement is largely irrelevant since the payment is reported by whoever actually receives the payment.

[tagteam]

In other words, if you received the payment individually, then you would report it on your 1040.

If the estate received the payment, then the estate would report it on the 1041.

[jello77]

Thanks again for your response.

But I'm still confused about the 1099 issue.

I've searched everywhere, but I can't seem to find the answer to this question:

If an after-death Social Security payment is issued to the estate (rather than to family member) by an executor submitting Form SSA-1724, is the payment reported on any type of 1099 form?

What concerns me is that if the payment is included on uncle's SSA-1099 and I don't report it on his 1040 return, that will cause a problem with IRS.

But if the payment is NOT included on uncle's SSA-1099, it won't cause a problem to report it only on the estate 1041 return

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