Income in respect of a decedent - reporting of taxable interest in year following a death

[farmsonbob]

My father passed away on December 16, 2022 (Mother passed away years earlier) and we filed the 2022 tax return.  He had several investments in financial institutions (including Series EE bonds matured in early January of 2023) that generate 1099-INTs.  Was able to get the assets moved fairly quickly to the beneficiaries in early 2023 but some taxable interest was earned before I could get them all moved.  I applied for and received a new Taxpayer ID number for his estate.  I then contacted these firms to have them report the 2023 interest under the estate Taxpayer number or to the named beneficiaries on the accounts instead of my father's personal SSN.  Most of the firms, including the Treasury Department, said they would not change the 1099-INTs & would issue them with my father's SSN and it was my problem to work with the IRS to figure out how to report this interest income in 2023.  I know I am not to file a personal return in the year after death and instead file a Form 1041 for his estate.  Do I report all the interest on the Form 1041 even though it was reported on a 1099-INT with my father's personal SSN and not his new taxpayer ID number for his estate?  Anybody run across this before? 

[AmyC · Accepted solution]

Yes, you can fix the situation by issuing forms from the decedent to the estate. You are correct that once he passed, he no longer earned income. You will need to do a nominee entry.  If they are all 1099-INT, this is all you need-  About Form 1099-INT, Interest Income.

General Instructions for Certain Information Returns (2023)

Nominee/middleman returns.

Generally, if you receive a Form 1099 for amounts that actually belong to another person, you are considered a nominee recipient. You must file a Form 1099 with the IRS (the same type of Form 1099 you received) for each of the other owners showing the amounts allocable to each. You must also furnish a Form 1099 to each of the other owners. File the new Form 1099 with Form 1096 with the IRS Submission Processing Center for your area. On each new Form 1099, list yourself as the “payer” and the other owner as the “recipient.” On Form 1096, list yourself as the “Filer.” A spouse is not required to file a nominee return to show amounts owned by the other spouse. The nominee, not the original payer, is responsible for filing the subsequent Forms 1099 to show the amount allocable to each owner.

You can register to file online free with the IRS (which is new this year and I don't know how the process works so it may take time) or you can file with a variety of companies online or you can mail the forms. See more here.

I am very sorry for your loss.

[farmsonbob]

Thanks very much.  It makes sense now.  Thanks again!