1099R to deceased person

[NECPA in NEBRASKA]

Taxpayer died early in 2017 and  received a 1099R complete with withholding for the wrong state and the IRS in her SS#.  Her kids say that it went to the estate and that not one person received it. I thought that the estate was closed in 2017, so I don't even know what to do with this mess. It looks like they just closed out the IRA and didn't bother telling the bank that she was deceased. Does anyone have any ideas for how I can fix this? Can I even file a 1040 for 2018 with a long gone taxpayer? I don't even know how to extend it. I did not need this on April 1 and I know that it's not a joke.

Thanks!

[Pacun]

Will the estate or if the person were alive owe any taxes to the IRS or the State?

[NECPA in NEBRASKA]

It's $17,000 so if it's the estate. yes. They cleared out the IRA and then distributed it. I don't know if there were no beneficiaries set up on it or why the credit union issued a 1099 to a person that had been deceased over a year. There was federal and state withholding. I don't know how they have managed to get this so screwed up. The siblings are getting different information and one of them lives in another state, so the credit union has been holding that state's withholding for the last three years even though it was just a mailing address for the daughter. The mother never lived there at all and I could not get the daughter to talk to the credit union. This is the kind of crap that I don't need in April.

[Roberts]

Are you being paid to worry about this?

The executor or personal representative from the estate needs to file the tax return if so inclined. Since you say tax was withheld, how do you know it would owe taxes?

[NECPA in NEBRASKA]

Thanks! I'm assuming that the estate would have to pay out at the higher tax rate and it was withheld in the deceased's SS#. The whole thing is totally messed up. They are depending on me to file any tax returns due. I was under the impressions until yesterday that all of the taxes had been filed in 2017.

[grandmabee]

It will go on a 1041 and if the estate already distributed the money then goes to beneficiaries.  It would be first and last return.

More troubling is that the bank issued the money to a dead person 2 years after.  How did they cash the checks?  I think I would make them talk to the bank.  it should have been issued to the estate.  Does the estate even have a EIN number?  It will not go on the deceased person return.  you can't file a return for her.  If they don't have a EIN number you can apply for one and then file an extension for the estate return.  You can do this online.

[NECPA in NEBRASKA]

Thanks! I agree that the bank should not have issued anything to a dead person. I'm afraid now that other stuff might come out now that has not been handled. I just want the withholding transferred to an estate number. They are supposed to be checking for one. 

[SaraEA]

You can't transfer withholding.  It can only go to the person, but you can't file a return for the deceased now because the SS# has likely been locked.  The bank has to handle this.  And the estate will not pay taxes if the income was distributed, as it apparently was.

[Roberts]

17 hours ago, grandmabee said:

How did they cash the checks?  I think I would make them talk to the bank.

If you write For Deposit Only on the back of a check, most tellers will let it slide (not notice) with a roughly similar name or if they had a joint account.

It's exceptionally common for people to find out years later that there was a small balance somewhere. They aren't going to open an estate for $300 so they just deposit the funds into a bank account that is "similar".

Had a client with one like that and he kept telling me tellers refused to deposit the funds. Turns out he felt it was important to tell the entire story to each teller before attempting to deposit the check. I mentioned it might work if he just shut up and about an hour later he calls to tell me it sailed through.