How to reclaim withholding for decedent

[Sara EA]

A dear client died in 2021.  The estate is on a fiscal year, no problem there.  His spouse will be filing Single in 2022.  There are three 2022 IRA distributions reported to him under his Soc Sec number.  IRS says the person who received them should report them; they were deposited into their joint account, so they go on her 2022 return.  There was state and federal withholding on the 1099R, under his SS so I can't put the amounts on her return.  The 1310 doesn't cover this situation.  Any ideas how to get the withholding back?

[jklcpa]

See Burke's answer. Corrected 1099R should be issued.

 

 

[Lee B]

5 minutes ago, jklcpa said:

See Burke's answer. Corrected 1099R should be issued.

Well that will be a challenge, especially getting the WH refunded

[jklcpa]

4 hours ago, cbslee said:

4 hours ago, jklcpa said:

See Burke's answer. Corrected 1099R should be issued.

Well that will be a challenge, especially getting the WH refunded

And that is why I qualified and  limited my answer to the portion of Burke's response where he said 1099R should be corrected to reflect the name and SSN of the spouse instead of the deceased.

[Lee B]

As a practical matter I agree.   However I do wonder whether the taxes withheld by the fiduciary are valid based on the instructions

of someone who passed away in the prior year?

[BrewOne]

how about a 1041?--report as income in respect to a decedent.  just throwing that out there.

[Sara EA]

The problem is not the income but the withholding.  It was reported in the decedent's SS number.  He died the prior year and can't file for 2022.  Spouse or estate can't claim the withholding because it was reported in his SS, not hers or the estate's EIN.  I'll go the route of trying to get the 1099Rs corrected.  Thanks everyone for the suggestion.

[BrewOne]

Well, if getting corrected 1099's is a dead-end...an estate can be issued a refund.  That refund can then be passed on to beneficiary.

[BrewOne]

I guess the first question I should have asked was: did the IRA's have the spouse as a named beneficiary on them?  It does look like the custodian screwed up regardless, if they knew the owner was deceased.  Normally they would have requested the estate EIN if no one was named as a beneficiary.

[Abby Normal]

You could just report this on the surviving spouse's return and respond to any notices with a copy of the 1099R. Or, if the withholding is close to the tax due, simply ignore it.

[BulldogTom]

On 6/27/2023 at 6:30 PM, Sara EA said:

they were deposited into their joint account, so they go on her 2022 return.  

Why do they go on HER return when they were deposited to an account that he owns?  

I think you are overthinking this.   He received the money, the Fiduciary indicated they were paid to him and issued the 1099Rs to him.  The 1099R shows a tax withholding reducing the money that was paid to him.

Put it on his return, claim the withholding, and if the IRS questions, show them the 1099R.  

Tom
Longview, TX

[jklcpa]

12 minutes ago, BulldogTom said:

Put it on his return, claim the withholding, and if the IRS questions, show them the 1099R

Because he died in 2021 and this was a 2022 distribution reported under his SSN on the 2022 1099R.

[BulldogTom]

2 hours ago, jklcpa said:

Because he died in 2021 and this was a 2022 distribution reported under his SSN on the 2022 1099R.

i got my he's and her's mixed up.....sorry

Tom
Longview, TX

[Sara EA]

The income will go on her return, as the IRS says it should be reported by the person who received it.  The withholding, however, is in his SS number, not hers or the estate's, and he can't file the year after he died.  Following the good advice from other above, I asked the client to get corrected 1099Rs with her info on them.

[Lee B]

10 hours ago, Abby Normal said:

You could just report this on the surviving spouse's return and respond to any notices with a copy of the 1099R. Or, if the withholding is close to the tax due, simply ignore it.

I think Abby's suggestion is a good backup plan.