Question about 1099- R for a deceased family member.
My adult, 58year old, disabled, brother lived and died in Maryland in 2021. I am the Estate Administrator, and the sole beneficiary, and live in Wisconsin.
In 2022 a retirement account was cashed out to the Estate, and a 1099-R was received using the EIN of the Estate that withheld state tax for Wisconsin and none federally. I did not receive a K-1.
I am trying to understand if I have to actually file a tax return for the decedent if this is the only income received by the estate in 2022. I have seen conflicting advice on these forums.
Option 1 – I need to file a tax return for the Estate.
Option 2 – I can put this 1099-R information into a Schedule K-1 (Form 1041), which allows me to declare it on my personal tax return and that it would show up on my 1041 on line 8.
Can some one help me determine which option is correct?
More details….
Option 1 details- The forum expert said that “withheld income taxes can't be passed through to beneficiaries on either Schedule K-1 or Form 1041-T.” Which means, I think, that I will need to file a separate return for the decedent, using their EIN number, not the SSN, and a State of WI non-resident form to pay the federal taxes due, and to receive the excess WI withholding refund.
Option 2 details – The forum expert says I can pass this “Distributable Net Income through to beneficiaries of the estate, to be taxable to the estate beneficiaries instead of to the estate, by reporting it on Schedule K-1 on your personal tax return for the year that includes the end date of this estate's tax year covered by this Schedule K-1. The estate tax return (Form 706) will include the value of the retirement account regardless of how it was distributed.” This sounds preferable, but I did not get a K-1. And the 706 form is confusing, in that the estate was not large, and not gifts were made prior to death so I am not seeing why I need to file that.
