What are the steps I need to take to file a form 1096 and 1099-INT to the nominee designate?

[keefersmith]

I am submitting a 1040 for my mother who passed away during 2023 so I am the nominee designate for her 1099-int for part of the interest earned during 2023.  I am currently using TurboTax Deluxe.

[RobertB4444]

If your mother was alive for part of 2023 then she should have a tax return filed for her if she meets the filing requirements.  Any 1099s issued with her social security number should be included on that return.  In future years you should include those on your return.

@keefersmith 

[keefersmith]

Per the IRS the interest paid on the account after her passing is not applicable to her tax return and has to be applied to a nominee designate (i.e. beneficiary) who is to be issued a 1099-int for the interest paid on the account after her passing for the remainder of 2023.  I am try to understand how to submit a 1099-int to the irs for the nominee designate (i.e. me) to include that interest on my 2023 taxes.  I am using turbotax deluxe but this doesn't appear to be supported.  do I need to upgrade to a different turbotax version such as home & business?

[RobertB4444]

You have a couple of options.  

You can issue yourself a 1099-int from your mother for the amount of interest paid to you in order to report the transfer to the IRS.  That's very involved but it definitely does dot all the i's and cross all the t's.

Or, you can manually enter the 1099 into TurboTax and, in the blank for the bank name, enter "XXXXX Bank, Nominee interest for SSN xxx-xx-xxxx".  Then that is the name that will show up on the schedule B.

@keefersmith 

[keefersmith]

Ok, thank you!  If it is acceptable to the IRS to just manually enter the information in the blank for the bank name on a 1099-INT in my 1040 (as you specified) then I will do that.  Everything I have read indicated that I had to submit a 1099-INT to the IRS for the nominee interest to accomplish this.  As you stated, that gets very involved.

Thanks so much for your help.

[DianeW777]

Yes, the IRS will accept the interest reported on your tax return and @RobertB4444 gave you the appropriate steps to show the necessary information to the IRS.

Keep a copy of the 1099-INT so that if you need to answer any questions in the future you can easily show the income was reported.

I am sending my sympathies to you and your family. 

@keefersmith 

[flobergken]

RobertB4444 - This is really good insight.  My situation is the same as keefersmith.  Just to be clear, if I do the TurboTax approach you outlined - manually enter the 1099 into TurboTax and, in the blank for the bank name, enter "XXXXX Bank, Nominee interest for SSN xxx-xx-xxxx" - I would use the SSN of the deceased parent, correct?

[fanfare]

Nominee means you are nomineeing it out to another SSN and not paying any tax on your return.

In which case you have to send 1099 to the pesron and to the IRS, and Form 1096 to the IRS.You dont do that in this situation

"Income in respect of a decedent"

if not on the decedents return, put it on your return.

You're overcomplicating.

[flobergken]

Maybe I did not articulate my message very well.  

I believe this is great insight because - if I understand this correctly - it avoids having to create a form 1099 and 1096.

I understand that I must put the portion of the 1099 income that occurred after my deceased parent's DOD on my return.  With the advice in this discussion I now understand how to enter this income on my return in TurboTax.

My only question was, when I make the entry of my portion of my deceased parent's 1099 income in my return, naming the payer as  "XXXXX Bank, Nominee interest for SSN xxx-xx-xxxx" do I use the decedent's SSN?

[MaryK4]

To add to fanfare's reply-Whoever has the right to receive the income must report it on their personal return if they received the distribution.  You can add it to the tax return as Miscellaneous income.  

See Income in Respect of a Decedent.
 

Under Less Common Income select Miscellaneous Income, 1099-A, 1099-C

1. On the Let's Work on Any Miscellaneous Income page, select Start to the right of Other reportable income
2. On the Any Other Taxable Income? screen, select Yes
3. On the Other Taxable Income screen enter the description "IRD for Name last four SSN," then the amount.  Select Continue
4. On the Other Miscellaneous Income Summary screen, select Done

@flobergken

[keefersmith]

@flobergken I took @RobertB4444 advice last year and manually entered the 1099 into TurboTax.  In the blank for the bank name I entered "XXXXX Bank, Nominee interest for SSN xxx-xx-xxxx" using my Mom's SSN.  I won't vouch for if that's the correct wording or not, maybe the other recent suggestions are more correct.  I have to do it again this year so will be consistent and enter it the same way I did last year.  I guess the main thing is that interest paid was accounted for on my tax return.

[keefersmith]

For a little more clarification, This was interest paid by a bank for my Mom's savings account on which I was a joint owner.  The 1099 sent by the bank has my mom's TIN associated with it.  we are still settling out the estate but that account will be closed out soon.

[AmyC]

As long as the IRS can follow the social security number and money trail, you are in good shape. If the IRS asks, you have the paper trail.

[flobergken]

Really good responsiveness and feedback from the community - from the experts and the follow-up from @keefersmith.  Thanks all!