How to record the split of 1099-INT income to remaining joint account owner after death of primary owner

[deeMatrix]

FIL passed away and had a joint savings account with DW.  A 1099-INT was issued by credit union to his SS# only as he was the primary so we calculated the amounts that should go on his 1040 form up to the day before date of death and then the amount for DW's 1040 from the date of death until she closed the account later that year. 

I then looked at the nominee approach and see TT only puts in the Nominee amount we calculated but not sure if that is correct approach to use in this situation (as interest goes to DW as remaining owner of the previous joint account versus going to the estate of the decedent)?  Also I don't see any other info that is asked/gets included such as who the nominee is that the amount is actually going to which will be included on their tax form.  Thanks in advance.

[AmyC]

Nominee is the correct approach to assign interest to someone else and subtract it from your form. The nominee should report the income on their return. In Turbo Tax, when you mark that We need to adjust the taxable amount, the first option is for the one who is the nominee, the bottom option would be for the owner of the form.

You are correct, the name and social do not go on the tax form since they are on the 1099 that must be prepared and sent to the nominee. See Topic No. 403 Interest Received | Internal Revenue Service

[VolvoGirl]

What is DW?   Is that Dear Wife?   If it is wife she can still file a joint return for 2021.   

You can file a Joint return the year your spouse died.  For the next two years following a husband's or wife's death, the surviving spouse can file as a qualifying widow or widower if they have a qualifying child. That basically lets you continue to use the same tax brackets that apply to married-filing-jointly returns.  After the year of death if you don't have a child you file as Single.

See

https://ttlc.intuit.com/community/using-turbotax/help/how-should-i-file-my-return-if-my-spouse-recen...

[deeMatrix]

Thanks for replies.  DW is Dear Wife and I should have indicated my DW or father-in-laws daughter.  Seems like a lot of unnecessary effort to have to fill out 1099 forms for my wife for under $300 in interest that was earned after FIL's date of death. 

I would have thought I could just put the my wife's name and her SS# on FIL's final return next to nominee amount that got subtracted from interest for him and then add that same amount to my wife as interest earned on our joint return.  Apparently not. 

I requested the credit union to provide a corrected 1099-INT for FIL with interest earned up to the day before date of death and then a separate 1099 for the remaining interest that was earned after his death to DW as she was then the sole owner of the account from his date of passing but the rep indicated they never seen that and then spoke to her Legal folks and said to just put the interest on FIL's return.  Perplexed.

So with the nominee, I have to send a copy of a 1099 with the amount and a completed 1096 form to the IRS and go through all of these hoops just for under $300?

[dmertz]

Correct regarding the forms that are required to be sent to the IRS.  You must use IRS-supplied paper forms which the IRS will mail to you upon request.  You are not permitted to use the downloadable pdf forms.

https://www.irs.gov/businesses/online-ordering-for-information-returns-and-employer-returns

[deeMatrix]

Thanks and yes I saw this on the IRS website and just can't believe how many steps required for a nominee.  So I got the Credit Union back on the phone and they are going to split the interest and issue a correct 1099-INT for my FIL and a new one for my wife which will address this issue the way it should have been done in the first place in this case.