Nominee 1099-INT

[Terbrikat]

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?

[MaryK4]

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.

[Terbrikat]

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]

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.  

[Terbrikat]

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]

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 

[Terbrikat]

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]

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 

[Terbrikat]

Last question,

Just received another 1099-INT from the Treasury Department, this one for Interest Income on T-Bills that was paid to Dad in 2024 (he died in 2023); his name and SSN is on the 1099-INT. A couple hundred bucks that when redeemed in 2024 was transferred to the Trust's bank account (different EIN). That account was equally distributed to all four beneficiaries and closed.

So on the Trust Return do I:

1) input info from the 1099-INT as Interest Income for the Trust (as if the Trust's info was on the form)?

2) file a nominee 1099-INT from Dad to the Trust, and report it with a Trust 1099-INT?

-or-

3) report the Interest Income from the 1099-INT as "other income" with the comment "Income in Respect of Decedent, Joe Smith, XXX-XX-1234"?

Thanks!

[AmyC]

Option 2 is correct. Since it has your dad's SSN, you need to issue the 1099-INT to the trust.  You can also do a 1099-int to each beneficiary -if that is how the money was distributed. It sounds like between your parents you have moving parts. Issuing 1099 forms from the decedent is the easiest way to keep things straight.

See: General Instructions for Certain Information Returns

My deepest sympathies.

[Terbrikat]

AmyC, thanks for the response.

I'm prepared to file a nominee 1099-INT from dad to the Trust and file that with this year's 1041. I guess my only concern is because when I asked my original question (almost same predicament with 1099-INTs from Synchrony issued in both parents' names/ssn), MaryK4 was pretty specific for me not to issue 1099-INTs because the money went straight to the beneficiaries; they were to report as IRD. Is it different with this 1099-INT for dad (i.e. file a nominee 1099-INT from him to the Trust instead of reporting it as IRD under Other Income) because the money went into the Trust?

Thanks,

[AmyC]

Maybe. IRD  is Income in Respect of a Decedent- This refers to income that the decedent was entitled to receive but did not receive before their death. This can include interest, dividends, and other forms of income.

I read that the interest was issued after he passed for my answer  but as to when he was entitled.... you would know that answer. You may not need to do anything extra. Also, the IRS connects the SSN and the estate and the beneficiaries listed. Not everyone is as smart and competent as you. I would either not issue the form or I would issue it to the trust.

[WRC98]

I have remarkably the same situation that the OP has.  Dad passed Aug 23 and Mom in Dec 23.  Dad's assets went to Mom and all of Mom's accounts were POD/TOD.  There is no probate and no executor, but I'm responsible person.  I received one 1099-Div around $3400 for 2024.  I had not planned to file 1041. The conflicting answers above have me back on the fence.

1) Nominee 1099 to beneficiary 

2) income respective of decedent (seems like this requires the commitment of income and receipt of income to straddle decedent's death).

3) or do I file for EIN and do 1041 for this one 1099

My biggest goal here is to make sure IRS sees where 1099 to Mom ended up.  Answers 1 and 3 seem to do this.  Answer 2 simply makes manual notation that won't connect in their database.

I'd appreciate further advise on this matter.

Thanks

[DaveF1006]

 No. You do not need to file a 1041 since the 1099 DIV was likely earned before your mother's death.  My advice is to file a final return for your mother and report the 1099 DIV plus any other income she earned in 2024.

[WRC98]

She passed on 12/29/23 (last business day of 23), so I included all of the 2023 dividends in her final return (joint with Dad who also passed in 23).  That was easy.  The dividends that acrued in her frozen account until distributed to beneficiaries is what is showing up on a 2024 1099-DIV in her name and ssn.  So my choices are as I stated above.  I'm reading a lot of differing advise.