POD Interest for surviving spouse beneficiary reported on 1040 or 1041

[Gater790]

If I am a surviving spouse that does not need to go through probate and I am the beneficiary of a POD or a TOD that accrues interest or dividends from the time of death until I receive the funds, does this need to be reported on a 1041 tax form or can it be reported on my 1040?

[dmertz · Accepted solution]

On a POD, TOD or joint account, interest accrued after the date of death is your income, not the decedent's income.  If you are the surviving spouse of the decedent, unless you remarry before end of the year you can still file a joint tax return for the year of death and the income can go on the joint tax return no matter which of you is shown on the Form 1099-INT reporting the interest.  Nothing earned in a POD, TOD or joint account goes on Form 1041 because the estate of the decedent is not the beneficiary.

If the income cannot go on a joint tax return and the financial institution issues a Form 1099-INT to the decedent that includes income earned after the date of death, the nominee process would need to be used to transfer the reporting of the income to the rightful recipient.  https://www.irs.gov/taxtopics/tc403