Small Retirement Distribution Without 1099-R

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cheese_breath
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Small Retirement Distribution Without 1099-R

Post by cheese_breath »

Late last December Chase Bank sent my deceased MIL a small check to correct an error in calculating the interest on a CD within her IRA. They sent the check because the IRA was closed by the time they discovered their error. (DW inherited the IRA upon MIL’s death in July and closed it shortly thereafter.) The accompanying letter stated because the IRA is closed the payment is considered a distribution.

However, no 1099-R was issued because the check and amount withheld for taxes is less than $10, and I’m not sure how to account for this on MIL’s final tax return. If it was simply interest I would just create a dummy 1099-INT and be done with it. However, this is a retirement distribution. I can’t imagine Chase didn’t report it to the IRS, but I’m apprehensive about trying to create a dummy 1099-R. For example, I’m not positive about the withholding. I calculated backward from the check amount using current tax rates to get approximate withholding amounts, but I wouldn’t swear they’re accurate to the penny.

What would you do? Should I try to report the payment or ignore it? If so, how? MIL’s tax liability will be zero whether I report it or not.
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Epsilon Delta
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Re: Small Retirement Distribution Without 1099-R

Post by Epsilon Delta »

Add it directly to line 15b or 16b. If your software won't allow this use different software.
clydewolf
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Re: Small Retirement Distribution Without 1099-R

Post by clydewolf »

MIL is over age 59-1/2? There would be no early redemption penalty.

Put this distribution on line 21, Other Income.
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dwickenh
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Re: Small Retirement Distribution Without 1099-R

Post by dwickenh »

clydewolf wrote:MIL is over age 59-1/2? There would be no early redemption penalty.

Put this distribution on line 21, Other Income.
+1 for the other income.
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cheese_breath
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Re: Small Retirement Distribution Without 1099-R

Post by cheese_breath »

Epsilon Delta wrote:Add it directly to line 15b or 16b. If your software won't allow this use different software.
I'll use TurboTax. It gets the info from the 1099-R, but maybe it will let me get by with a Skeleton 1099-R (?) I'll check
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cheese_breath
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Re: Small Retirement Distribution Without 1099-R

Post by cheese_breath »

clydewolf wrote:MIL is over age 59-1/2? There would be no early redemption penalty....
Oh Yes. Waaaay over. She was 92 when she passed.
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MarkNYC
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Re: Small Retirement Distribution Without 1099-R

Post by MarkNYC »

Since the MIL died in July and the check was paid in December, the income does not belong on your MIL's final year individual income tax return. It should be "other income" on her estate income tax return Form 1041, assuming such a tax return is required to be filed.
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cheese_breath
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Re: Small Retirement Distribution Without 1099-R

Post by cheese_breath »

MarkNYC wrote:Since the MIL died in July and the check was paid in December, the income does not belong on your MIL's final year individual income tax return. It should be "other income" on her estate income tax return Form 1041, assuming such a tax return is required to be filed.
Even though it was actually earned before she died, and was paid late due to a bank error?
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MarkNYC
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Re: Small Retirement Distribution Without 1099-R

Post by MarkNYC »

cheese_breath wrote:
MarkNYC wrote:Since the MIL died in July and the check was paid in December, the income does not belong on your MIL's final year individual income tax return. It should be "other income" on her estate income tax return Form 1041, assuming such a tax return is required to be filed.
Even though it was actually earned before she died, and was paid late due to a bank error?
That's correct. Any income paid to an individual after the individual's date of death is income to the estate.
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cheese_breath
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Re: Small Retirement Distribution Without 1099-R

Post by cheese_breath »

MarkNYC wrote:
cheese_breath wrote:
MarkNYC wrote:Since the MIL died in July and the check was paid in December, the income does not belong on your MIL's final year individual income tax return. It should be "other income" on her estate income tax return Form 1041, assuming such a tax return is required to be filed.
Even though it was actually earned before she died, and was paid late due to a bank error?
That's correct. Any income paid to an individual after the individual's date of death is income to the estate.
Well that makes it simple. No estate was opened. Probate wasn't required for what was left after the designated beneficiary retirement accounts and jointly owned bank account were handled.
The surest way to know the future is when it becomes the past.
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