Must a 1041 be filed?

[DexEA]

Lump Sum Pension received after death was reported on the 1099R in the estate FEIN, and then passed thru to surviving spouse. I think the decedent did not have a beneficiary named so rather than pass to the spouse, it had to go to the estate. Because this amount, $1,200 +/- is greater than $600 does a 1041 need to be filed for this one 1099R? It was deposited into an account created to cash the check and then distributed to the surviving spouse, so if a 1041 needs to be filed it would be distributed income which is then taxed to the spouse. Is there a a simpler alternative to filing the 1041?

By community property state laws all other assets where transferred and no probate issues so this is the one and only item in the estate.

[WhiteOleander]

Well, somebody's gotta pay the tax. So, if the estate pays the tax, a 1041 must be filed. If the bene pays the tax, a 1041 must be filed and show the income out to the bene on a K-1. So, short answer, yes a 1041 must be filed.

[Burke]

Lump Sum Pension received after death was reported on the 1099R in the estate FEIN, and then passed thru to surviving spouse. I think the decedent did not have a beneficiary named so rather than pass to the spouse, it had to go to the estate. Because this amount, $1,200 +/- is greater than $600 does a 1041 need to be filed for this one 1099R? It was deposited into an account created to cash the check and then distributed to the surviving spouse, so if a 1041 needs to be filed it would be distributed income which is then taxed to the spouse. Is there a a simpler alternative to filing the 1041?

By community property state laws all other assets where transferred and no probate issues so this is the one and only item in the estate.

Technically, yes, since the 1099R had the estate EIN on it. Hopefully, there was no withholding? It passes through to the spouse as Other Income, fully taxable.

[DexEA]

Thanks to both - not what I really wanted for an answer. No w/holding and the only other income is Social Security, if the 1041 did not need to be filed she would not even need to file any return - I use a pay per return to prepare business/trust/estate returns and I don't want to eat the expense and I don't want to charge her to file.

[Burke]

Frankly, I might just put it on my return if it were me and my 1099-R, and take my chances. If CP2000 is later issued, explanation of where it was reported would probably be sufficient. HOWEVER, as a professional tax preparer, I would NOT recommend this to a client. Do it right and avoid later problems. It will be simple enough. Don't know about the PPR cost, but it's not your fault, and she should pony up. It's the deceased that did it this way by naming the estate (or not naming a beneficiary) in the first place.

[Maggie]

Withholding??

Where would the withholding be claimed?? On the 1041? Or does it flow through to the beneficiary on the k-1??

[John of PA]

1041 Must Be Filed

A 1041 must be filed in this case. If it is not, the IRS will send a notice looking for it, and a tax bill without a distribution deduction on it. A 1041 is clearly required to be filed, as well as a possible state Fiduciary Tax Return.

[S T]

To practice your due diligence as a Tax Professional, I would say you need to file a Form 1041 and Associated K-1 forms to pass through to the beneficiary.

I had two of these for year 2012 - Bank opened and filed for an Estate or Trust EIN to deposit funds - so you know what that means - a tax reporting..

Unfortunate and it seems from the OP post you are trying to save the "widow" some $ for tax prep fees, as a Tax Prof I would complete correctly and fee charge your cost now, or to prepare or when you receive the IRS/State notice and spend hours and charge later.

For Maggie, on tax withheld at 1041 Level, it is line 24e for any Federal tax withheld from Forms 1099 - you should see a line in your software, my software says it "cannot" be passed through to beneficiaries on K-1, so would be used at the 1041 level

Sandy

[John of PA]

I also would like to add that to avoid 1041 taxes, you have to establish the distribution deduction, which can only be done by filing the 1041. The whole problem is the IRS computer is looking for this income under the Estate's FIN #. I don't see any way out of it.

[Burke]

Where would the withholding be claimed?? On the 1041? Or does it flow through to the beneficiary on the k-1??

(This is a current question to an old one by another poster first discussed back in March.) The withholding was shown on the 1099-R under the estate EIN, yes? If so, it goes on the 1041 to be refunded, while the entire gross amount is shown as a distribution to the bene on the K-1. The w/h tax does not "flow through" to the bene on the K-1. The refund can be distributed to surviving spouse (or other bene) when received. Hopefully, that will be before they have to pay any tax. If there is nothing else in the estate, 1041 can be marked "first" and "final." This is the only way to get that money back.