Withholding in deceased spouse's SSN

[jasdlm]

Client's husband died at end of 2010. Fund company continued sending his minimum distribution until May of 2011, so there is a fair amount of withholding in the SSN of the deceased spouse for 2011, although 2010 is the last joint return.

Any ideas re: how to handle this from a filing standpoint?

I know an efile will not work. Would it work to paper file? I have tried researching, but I haven't found much.

Thanks.

[Kea]

It sounds like it will need to go on a 1041 with K1s back to the beneficiary of the distribution.

[jasdlm]

I had thought of that, but was really hoping I wouldn't have to do that. In that situation, I would have to have the Bene pay tax on the income flowing through and wait for a refund of the tax withheld from the 1041, correct?

Thanks so much for your response.

[Kea]

There won't be any tax from the 1041. The income & withholding will flow back to the bene's 1040.

[OldJack]

Or... the 1041 could NOT pass the income (no K1) and request a 1041 refund for the difference in the tax and the withholding and then the beneficiary receives the net tax free. However, the tax might be higher than if put on the 1040.

[jainen]

>>request a 1041<<

It's going to take an extra step of explanation for the IRS to issue a refund on withholding not matched to a 1099. I'd try asking the IRA to reissue the 1099 in the name of the beneficiary (preferably) or the estate that received the income.

[jasdlm]

There won't be any tax from the 1041. The income & withholding will flow back to the bene's 1040.

How does one get the withholding to flow back to the bene's?

[Kea]

It needs to flow to Line 13B of the K1. I haven't filed a 1041 or used ATX in several years, so I can't give you specific instructions. (I'll be doing another 1041 in another couple of weeks, but it will be in TRX.)

And I agree with Jainen about requesting the IRA to reissue the 1099R.