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Stephen G.
Stephen G., Sr Income Tax Expert
Category: Tax
Satisfied Customers: 4010
Experience:  Extensive Experience with Tax, Financial & Estate Issues
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Am I correct in understanding that beneficiaries of Payment

Resolved Question:

Am I correct in understanding that beneficiaries of Payment on Death (non-probate) accounts are NOT liable for taxes on interest earned prior to the death of the owner and the 1099-Int form should be filed by the decedants estate? What can be done when the involved credit union will not send the 1099 to the personal represenative?
Submitted: 1 year ago.
Category: Tax
Expert:  Stephen G. replied 1 year ago.

Stephen G :

Hi & thanks for using our service. I'll do my best to give you a complete & accurate answer. Please ask me to clarify anything that is not clear.

Customer:

ok

Stephen G :

The interest through the date of death belongs on the decedent's final income tax return and the interest on the account after the date of death is taxable to the beneficiary. The 1099 is issued to the account of the decedent with the decedent's social security number until the account is closed or switched over to the beneficiary. Often, the 1099 figures have to be split between the decedent and the beneficiary by the accountant preparing the income tax returns. Many times, the 1099 that is issued to the decedent is included on the decedent's final income tax return without regard to making any allocation to the periods before & after death, primarily due to the fact that with interest rates so low, the interest allocable to the period after death is not significant.

Stephen G :

Since the Personal representative is responsible for filing the decedent's final income tax return, he or she should be able to obtain a copy of the 1099s. However, most likely the 1099s were sent to whatever address was on the account and are probably in the decedents continuing mail which by now should be forwarded to the Personal Representative.

Customer:

The death was in Nov. & the interest was over $6,000. All beneficiaries shared equally but were sent very different amounts on their 1099s, one $507 another $45, aNOTHER $80. I, as personal represenative, have not recieved a 1099-I to include in the decedants tax filing. Yes, the account was closed in Dec. when all funds were dispersed per POD.

Stephen G :

Was there only one account?

Customer:

I faxed their Estate Accounts Dept. all addresses and information in Dec. & all beneficiaries received their checks, all in the same identical amount.

Customer:

No, a total of 6 accounts - all divided equally.

Stephen G :

One reason there could be different amounts for the beneficiaries could be the timing of the withdrawal of their funds.

Customer:

It was only within a two - three week period.

Stephen G :

Are you the Personal Representative appointed by the Court?

Customer:

We are not going to probate since there are no other accets. I h

Customer:

I have been her POA, SS payee, and have been dealing with all of the medical & financial issues for over 8 yrs. We have not gone to court.

Stephen G :

Well, there's more that one reason to be formally appointed; the Power of Attorney terminates upon death; was there a will? Was it at least filed with the Probate Court? You may need to file a "Voluntary Administration" in order to assume the position of Personal Representative. At this point the bank hasn't been formally notified as to who represents the Estate. That's probably why you haven't been able to get copies of what you need. Have you checked what is happening to the decedent's mail to search for the 1099s?

Stephen G :

If you need to contact me again with any tax or financial questions, you can just ask for "Steve G" at the beginning of your question. Again, please remember to rate my response. Bonuses, where you think they are warranted, and excellent ratings, are always most appreciated. Thanks again for using JustAnswer.com.

You may get a short survey from the site; if it isn't too much trouble please answer it; thanks, SEG

Customer:

I was disconnected when we were talking last night. No, the information was not helpful since it did not answer what I should do. And I DID notify the credit union that there was no probate court etc.

Stephen G :

I'm sorry you were disconnected, that's something I can't control; there have been some problems lately in that regard. The whole idea of this "Chat" mode is for us to have a discussion about the issue that is concerning you. Obviously I had no way of knowing if you were disconnected or simply read my comments and were satisfied.

Stephen G :

I can see now that you weren't satisfied and rather than just let your "Poor Service" rating stand, I would appreciate the chance to discuss the situation further with you. Perhaps, you didn't receive all of my comments and therefore you were unable to consider them.

Stephen G :

I will be available all afternoon today if you come back online, just type something in & I should get an email telling me that you have returned. Hopefully, I can then satisfy you and you will upgrade your rating. I have almost a 100% satisfaction score & I would like to keep it that way.

Stephen G :

I had asked you a series of questions & evidently you were disconnected before you could answer them. In case you didn't receive that data, I will repeat it here. Depending upon your answers to those questions, I can better advise you how to proceed.

Stephen G :

Well, there's more that one reason to be formally appointed; the Power of Attorney terminates upon death; was there a will? Was it at least filed with the Probate Court? You may need to file a "Voluntary Administration" in order to assume the position of Personal Representative. At this point the bank hasn't been formally notified as to who represents the Estate. That's probably why you haven't been able to get copies of what you need. Have you checked what is happening to the decedent's mail to search for the 1099s?

Stephen G :

Hello?

Customer:

Thank you for trying to assist me but it is really a question of how to get the credit union to respond and do the correct thing. This "session" has not helped me but it is not your fault. We are not going to probate ..... I intend to submit her tax return (as I have always done) but include the 1310 form. I have her death certificate. The problem remains with the credit union that sent out crazy 1099s to the beneficiaries and have not sent me the proper "official" 1099-I to be filed with her final personal 1040.

Customer:

I have previously called several times to the credit union, faxed them twice (to different offices) and emailed them. I have also had the beneficiaries attempt to contact them and encouraged them to have their tax advisers also call.

Customer:

That all being said I think that you should consider returning a portion at least, of the $45 that I spent on this attempt since I really have gained nothing by it.

Stephen G :

Well, first of all, I explained why the credit union may not be responding to you. If the decedent had a will, even if there are no assets to pass (no assets in her name alone) under the will, the law actually requires that the will be filed with the Court. Normally, if you are the named executor, or the person in possession of the decedent's property and there are no objections, there is an informal procedure that may be employed (a voluntary administration), where you will be able to be the "Voluntary Administrator" and there are no filings or reports that must be filed with the Probate Court. The fact that you do not want to follow my recommendations, is obviously your prerogative; however when you say that "this session has not helped me", that is your choice. If you followed my advice, your problem would be solved.

Stephen G :

As far as a refund is concerned, I can't control that as I will not be compensated as long as your "poor service" rating stands. It is odd that you rated me that way & yet you say "this session has not helped me but it is not your fault". If it isn't my "fault", how does that translate to a "poor service" rating?

Stephen G :

All you need to do is to contact "Customer Service" and ask for a refund. Since we offer a satisfaction guarantee, you will receive a full refund or credit to your charge or debit card of any deposit or payment you made. I can't do that for you, as we don't handle the money & I haven't received any part of your deposit as we do not get paid if we receive a "poor service" rating.

Stephen G :

I hope you are able to get the information you need, again, since the decedent died in November, it is likely that the decedent's 1099s have been forwarded to the address on file with the bank.

Customer:

The address on file is MY ADDRESS. Nothing that you have suggested actually applies except for the suggestion of contacting "Customer Service". Thank you.

Stephen G., Sr Income Tax Expert
Category: Tax
Satisfied Customers: 4010
Experience: Extensive Experience with Tax, Financial & Estate Issues
Stephen G. and 5 other Tax Specialists are ready to help you

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