Any way to nominee Federal Withholding?

[jasdlm]

Taxpayer died in 2012 (my client) and the person who handled his affairs (also my client - not spouses) received a 1099-int for all of the interest from a large account deceased taxpayer held at a credit union. (Ownership of the account was transferred late in the year.) The Credit Union issued 1 1099 in my living clients name/social. When she called them about it, they told her that since the account number didn't change when ownership transferred, they didn't have to issue two different 1099s. Really?

Anyway, deceased taxpayer was in a nursing home so has high medical deductions. I would rather take the income on his return. I can nominee the interest to him, no problem, but he was subject to backup withholding. Is there any way I can move that withholding to his side? Doesn't matter, I guess, if not, but it would be an accurate reporting of what actually occurred.

The credit union also continued the backup withholding when my client transferred the account to her name. They will not remove it, even though my living client isn't and never was subject to backup withholding. I clearly do not understand credit union laws.

Thanks for any help.

[jainen]

>>Ownership of the account was transferred late in the year<<

The Instructions for Schedule B explain how to report nominee income. As you say, no problem. Simply issue a 1099-INT to the decedent and another one to the estate after getting an EIN so you can file Form 1041. Yep, that should do it!

[kcjenkins]

And maybe if that credit union will not cooperate, your living client should consider moving the funds to another bank or credit union.

[ljwalters]

I'm with KC Close the account.

[jasdlm]

She is closing the account. It still makes me frownie face .

[kcjenkins]

Well, look at it this way, if that bank was that user-unfriendly, it's good she learned that early, and moved her money out of there.

[jainen]

>>consider moving the funds to another bank<<

Always close the account anyway. That's the only way to be sure you stop every caregiver that had used the debit card and every subscription set for automatic renewal, as well as lazy bankers. Meanwhile make a reasonable allocation in good faith so ALL the interest is reported somewhere, in case the IRS wants to know.

[kcjenkins]

Good point, Jainen. I had not thought about those possible events, but in today's computerized world, auto-renewals are a frequent thing.