How do you enter interest income from a POD account?

[bsjaffe]

I understand that interest posted on a POD account after the original owner's death through the time the account is claimed by the beneficiary must be reported as income.  This amount is not derivable from a 1099-INT, but can be computed from the account's transaction history. How should this interest be reported?  What form should be used to enter the data?  Create a fake 1099-INT for each POD account?

[bsjaffe]

Thank you, Todd.  I have a related question I hope you can also answer.  What do I do about two checks for interest from POD accounts that were issued after death directly to the original account holder, and which were then deposited into an estate account?  Even though this was after-death interest, since it was deposited to an estate account, and thus is now part of the estate, do I just ignore it, and not report that interest?   If so, do I need to document the omission in any way?

[ToddL]

Large amounts?

[bsjaffe]

The two checks total just over $200.

Also, I neglected to mention that all of the POD accounts were joint to two beneficiaries, so I assume that each beneficiary should report only one half of the total after-death interest for these accounts.  Is that correct?

[ToddL]

That would work (1/2 each). Also, $200 of interest is not something I would be concerned about ignoring - it is an immaterial amount for tax purposes.

[ToddL · Accepted solution]

Enter the POD interest in the "Income from 1099-INT" interview, just as if you received a Form 1099-INT (I would call this a "substitute 1099-INT", not a "fake"). 

You do not need to make a separate entry for each POD account - you can make a single entry with the total from all the accounts and list the Payer as "POD Accounts".