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1099-r issued to trust with withholding

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    1099-r issued to trust with withholding

    Client's sister passed away which he received her IRA that was issued to the trust. He immediately put it into his account. I taxed the 1099r on line 8 to pass through the trust to the beneficiary since he receive the entire amount. BUT there is Federal and State withholding which the federal withholding is reported on line 24. Will the trust have to receive the money for both fed and state? It is taxing it to the beneficiary but not federal tax withheld to offset the amount taxed to the beneficiary. Can the federal withholding pass to the 1040 tax return and if so which line to offset that amount so it won't be refunded to the trust.

    #2
    No, the tax cannot pass to the 1040. When you file the 1041, take credit for the withholding which will be under the EIN of the trust (which I am assuming since you did not say what the taxpayer ID was on the 1099R). A refund check will be received made payable to the trust. That must be deposited, then disbursed to the beneficiary(ies.) How did the bene cash the check if it was made payable to the trust? Did it pass through the trust account?

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      #3
      Thank you

      Thank you for the help. I thought the Refund had to go to the trust but when you have $76,800 1099-r that was made out to the trust number and the client already distributed it which the only beneficiary is the client. He got the number for the estate due to the IRA and she passed away in 2012. Been a mess. So that is why I am assuming he will be taxed on it on his personal tax return but the withholding of $19,200 will have to be through the 1041 to be refunded.I hope I am correct. Got to explain this to him.

      Thank you

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        #4
        He will be taxed on it. And the refund will have to go through the trust. Was there any other income or assets in the trust that he received? The amt he pays tax on depends on what he received per the DNI calculation. Although you have to report all the distribution on the 1041, he did not get the whole IRA the first time. If he got at least $76K, then it is all taxable to him since taxable income is considered first. If she died late in 2012, then a fiscal year could be elected that would end early in 2013. In other words, you could make it a short year if there is anyway possible to make the distribution fall into the 2nd estate year ending in 2014. What was the date of death and what was the date of distribution? Has a return already been filed for the first tax year?
        Last edited by Burke; 05-16-2014, 08:43 AM.

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