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Terbrikat
Returning Member

Nominee 1099-INT

I have a question about Nominee Dristributions and related 1099-INTs.

Background: Our father died in August 2023 and then mom died in December 2023.  They had 10 accounts with Synchrony Bank (1 High Yield Savings and 9 CDs, all jointly owned but the primary SSN was my father’s). Mom became sole owner of all 10 after dad’s death plus she purchased two additional CDs under just her name/ssn before her death. As the Personal Representative named in their Wills (and Successor Trustee named on their Trust) I notified Synchrony of her death and all 12 accounts were paid out to the listed Beneficiaries on 12 Jan 2024 (some split between me and 3 siblings, some going solely to each of us, and the savings account went into the Trust account). Their final return was filed last spring.

Now (Jan 2025), Synchrony sends me 1099-INTs for all 12 accounts; mom is the person listed as Recipient on all 12 although only the 1099-INTs for the two additional CDs have her ssn…the other 10 that she co-owned w/dad have his ssn as Recipient’s TIN. Total Interest from all is $1585 but that actually went to beneficiaries when the accounts were closed as the interest reported was credited to the accounts in on 8 January 2024; technically this was Income in respect of a Decedent.

I feel each of us siblings should receive a 1099-INT showing Nominee Distributions since that interest was paid to us in January 2024 when the accounts were closed. Right? FYI, by looking at each account I can tell how much interest income went to each of us. This interest never went to mom nor did it go to the Trust.

 

If so, can someone please give me specific guidance on how to fill-out the 1099-INT and 1096. I understand the person who received the interest is listed as Recipient but do I list mom as the Payer?

 

Do I list her ssn as Payer’s TIN for all 12 accounts or will I need to essentially do two 1099-INTs for each recipient due to dad’s ssn being on most of them (i.e. one 1099-INT to each of us for the accounts with dad’s ssn and one for those under mom’s ssn)?

 

Do I list the same account number as is listed on the original 1099-INTs?

 

Lastly, since their final return was submitted in 2024 (for their year of death, 2023), I don’t think I can/should amend that return because this is interest income from 2024. Additionally, I don’t know if I can/should list it anywhere on the 1041 I’ll submit for the Trust this year since it had nothing to do with the Trust (it will be the final 1041 since all funds from the Trust have been dispersed)?

For the 1096, should I list mom’s info under Filer’s name/address with me as the person to contact in addition to signing the form? Or, am I the Filer, person to contact, and person who signs the form?

 

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7 Replies
MaryK4
Employee Tax Expert

Nominee 1099-INT

In this situation, you would not file nominee 1099-INTs- your mother is not the nominee recipient because she passed away, so although you could file on her behalf as personal representative, I am not sure if the IRS efile system would accept the filing (because her social security number would be designated deceased).   Your follow up questions on filing the nominee 1099-INTs are null because of this. 

 

You are correct that this is Income in Respect to a Decedent and this is the path you will want to follow.  The IRS says:

 

Income in respect of a decedent must be included in the income of one of the following.

  • The decedent's estate, if the estate receives it. 
  • The beneficiary, if the right to income is passed directly to the beneficiary and the beneficiary receives it.
  • Any person to whom the estate properly distributes the right to receive it.

        Income in Respect of a Decedent

 

If the income was already distributed, the beneficiary will need to report the income and pay tax on it.  It is possible to claim a deduction for the taxes paid on this. You should contact the beneficiaries of this.  

 

You would not include the income on the trust return, as it is separate.  

 

Please post any additional questions you may have.

 

 

 

 

 

 

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Terbrikat
Returning Member

Nominee 1099-INT

MaryK4, thanks for the response.

Without doing 1099-INTs for each beneficiary, how should I provide them with info on what to do to claim this interest income on their returns? I have no problem calling, emailing, or sending a letter to each one which basically says how much interest income they need to add to their returns but if they decide not to, how would that affect mom's 1099-INTs? Will the IRS be looking for some way to show the income is reported by somebody (all of us) and that tax is being paid on it?

For clarification, if all of us claim the appropriate amounts of interest income it appears mom's 1099-INTs don't even get used....right?

Lastly, would each of us claim this as "miscellaneous income-other reportable income" and what would the description be?

Thanks!

MaryK4
Employee Tax Expert

Nominee 1099-INT

You can provide them with the amount.  Because you provided the information, you have fulfilled your obligation as personal representative so you could not be held responsible if they do not include on their tax returns.

 

Because of the amount, it is highly unlikely that the IRS would pick up any amounts not included on any tax returns, but the IRS can investigate if they chose to.  Technically, if this was the only income for your mother, there would not be a filing requirement for her if she had not filed the final return so even the IRS computer automated system would not flag it.     

 

Yes, if everyone claims the interest on their personal returns, the income on the 1099-INTs in your parent's name would be accounted for and the tax obligations for your mother would be concluded.  

 

On their tax return, you can use the description Income in Respect to Decedent and include name and last four of social.  

 

I am so sorry for your loss.  

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Terbrikat
Returning Member

Nominee 1099-INT

Thanks again Mary.

One last, somewhat unrelated question. Although none of the previously mentioned Synchrony accounts went into my parent's Trust account, I did put money that I received as their Personal Representative (under my name/ssn) from their Treasury Bills/I-Bonds. Interest shown on my 1099-INT is $3700. All of the money that went into the Trust account (this and proceeds from the sale of their home) has been equally distributed between me and my 3 siblings.

So, can I do a Nominee Distribution from me to the Trust for the amount listed on the 1099-INT from the Treasury Department since everything went into the Trust? Would I need to do a 1099-INT from me to the Trust? Any other advice?

Thanks.

RobertB4444
Employee Tax Expert

Nominee 1099-INT

In this case I would do the 1099-INT for the trust.  $3700 is enough to get your return flagged and get a letter from the IRS so avoiding all of the hassles associated with that seems like a good way to go.

 

Do a 1099-INT from you to the trust with the full distribution.  

 

@Terbrikat 

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Terbrikat
Returning Member

Nominee 1099-INT

Just to ensure I'm clear about claiming IRD from a 1099-INT a deceased parent receives (interest was earned after death but before payout to beneficiaries). 1099-INT was received the year after filing the final return.

 

Example, Interest Income listed as $1000 on mom's 1099-INTthat should be equally split and claimed by four beneficiaries; I'm one of them.

 

In TurboTax Premier, I list this under the "Less Common Income - Miscellaneous Income - Other Reportable Income" with a statement like "Income in Respect of a Decedent, Mary Jone XXX-XX-1234". 

 

Is there anywhere I need to mention this came from a decedent's 1099-INT as Interest income (since the actual 1099-INT doesn't actually get reported?

Thanks!

MaryK4
Employee Tax Expert

Nominee 1099-INT

No, there is no way to indicate that the income is for the decedent's 1099-INT (it would be nice if there would be way to declare it on the decedent's IRS Wage and Income transcript), which is why I add the description that would show on the personal tax return.)  @Terbrikat 

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