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My mother had an annuity to which the children are

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My mother had an...

My mother had an annuity to which the children are beneficiaries. Two payments were deposited in her bank account by ACH after her death. The annuity co. refuses to reissue 1099. Can the beneficiaries split the two payments on their personal taxes? (two beneficiaries were POD on bank acct of 4 children if that matters)

Accountant's Assistant: The Accountant will know how to help. Is there anything else important you think the Accountant should know?

I don't think so.

Submitted: 4 months ago.Category: Tax
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Answered in 3 minutes by:
3/9/2018
Tax Professional: Dr. Fiona Chen, Certified Public Accountant (CPA) replied 4 months ago
Dr. Fiona Chen
Dr. Fiona Chen, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 1,175
Experience: Former IRS Revenue Agent
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I'm Fiona, former IRS revenue agent. I am looking at your question and will get back to you soon. Fiona Chen, MPA, Ph.D., CPA, ABV, CFF, CITP,IMTA

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Tax Professional: Dr. Fiona Chen, Certified Public Accountant (CPA) replied 4 months ago

Dear Customer,

Whoever has the tax ID should report income on that tax ID. For the deceased, maybe you need to file Form 1041 to report on Form 1041 and then, flow to the beneficiaries via Form K-1.

Also, annuity income could have been one month late. Then, it is your mother's income when she was still alive. You can include the annuity into her last income tax return.

However, just split into half and half to put on your individual return is not recommended and there is no such tax law or rules or procedure.

Also, when we do this, we are trying to be able to handle the IRS potential inquiry. Well, if the IRS audit, how do you plan to claim that say, 15,000, for example, into your tax return is half of this annuity Form 1099-R? What if the IRS says 15,000 is your income, in addition, your mother and her estate owes 30,000 income and its tax. Well, how do we argue with them?

Hopefully, this won't happen. But for two heirs directly put half of the deceased's Form 1099 into their personal tax returns is not a good idea. For another scenario, if the IRS makes inquiry, you would be voluntarily to open your returns for their examination.

It depends on the size of that Form 1099-R, too. The IRS does do automatic matching and makes inquiries.

Please feel free to follow up.

Regards,

Fiona

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