SS Benefits paid to spouse after death?

[Valarie]

Wife died in 2006, rather suddenly. Filed a joint return in 2006, and he is filing single in 2007. He received a 1099-SSA for over 21,000 in benefits, 18,000 of which are paid in 2007 for 2006.

He said that the SSA urged him to file for this claim after wife had died, and the 1099 reads John Smith for Mary Smith O/B/O. Johns SSN is not anywhere on the 1099, and Mary's is only at the bottom as the claim number.

If I elect to carryback the 18,000 to 2006, it will be 85% taxable, as there were large distributions from pensions as a result of her death. If I choose not to carry it back to 2006, can I just leave it off his 2007 return completely - as that certainly amounts in the least amount of tax paid - and that's what TTB says I have the choice to do.

I see it as Mary was the recipient, and since she's not filing this year, it's not reportable to John, as his SSN is nowhere...

Am I just wishful thinking??

Valarie

[Gretel]

I think this social security payment is considered IRD and as such needs to be included in the 2007 tax return.

[Valarie]

Thank you G, for your response..

Isn't the IRD only applicable if there is a 1041 filed?? There will be no 1041 in this case..

Just fishing, so if you have a cite, I'll be more than happy to research this..

Valarie

[fliszt]

If there

is no 1040 this year, will the stimulus ck arrive anyway?

[fliszt]

oops, please disregard previous

msg. I didn't read the question properly. Sorry.

[Gretel]

Isn't the IRD only applicable if there is a 1041 filed?? There will be no 1041 in this case..

Valarie

I don't think that filing form 1041 has anything to do with reporting IRD income.

[FEDUKE404]

Seems a bit illogical

I don't have a good answer, but I'm a bit confused as to the facts.

Did the wife NEVER receive any SS benefits (for whatever reason) and now the benefits are "hers", or is the husband receiving his own (possibly increased?) SS benefits as a result of her death?

Since the wife died in 2006, I do not see how she could possibly be receiving any legitimate "2007" benefits. I can explain away the delayed 2006 benefits, but the 2007 ones (for her) make no sense. Are you positive the husband's SSN is not on the tax document, especially since you said "John" was shown on that tax document?

FE

[Gary]

2006 SS paid in 2007

There are two ways to handle this. Report all SS in 2007 or use the lump sum method. You need to fill out worksheets to figure out how the SS would be taxed on the 2006 return. Sometimes the first method is beneficial to the taxpayer, and sometimes the worksheets end up with less tax.

[FEDUKE404]

But But But .....

There are two ways to handle this. Report all SS in 2007 or use the lump sum method. You need to fill out worksheets to figure out how the SS would be taxed on the 2006 return. Sometimes the first method is beneficial to the taxpayer, and sometimes the worksheets end up with less tax.

Of course this is how you handle the tax treatment of retroactive Soc Sec income, but can someone explain to me how a person who dies in 2006 can ever receive any 2007 Soc Sec benefits?? Poster Valarie has already stated that only the wife's SSN appears on the tax reporting document for tax year 2007. The deceased wife's "income" could not even legitimately appear on a 2007 income tax return, could it?

Now if this is the reasonably simple matter of the husband receiving increased/retroactive Soc Sec benefits during 2007 for calculations related to his own benefits for 2006 and even 2005, then it makes perfectly good sense to "spread out" the payments and recalculate the taxes for the prior years. Of course, he would have the option of claiming all of the benefits paid TO HIM during 2007 solely on his personal (filing as "single") tax return. If 2006 was a high income year (I think it was?) then what he can do, i.e. pick out the 2006 income and recalculate, is probably not what he should do.

Perhaps I've been too deeply involved with the folks at SSA and "know more than I should" but the facts here do not completely make sense. If the 2007 tax document reflects recalculated SS benefits potentially taxable to the surviving husband, that makes sense although one would think his own Soc Sec number would appear somewhere on that tax document. If the tax document reflects recalculated payments prior to the wife's death in 2006, that can make sense although her estate might have to deal with the "new" income.

But I still do not see how the surviving husband could (or should!) report any of his wife's benefits on his own 2007 tax return, when he is apparently only filing as a single person for 2007.

FE

[Valarie]

FE-
You are correct in your understanding... wife never applied for nor received any SS benefits, neither is husband receiving any SS of his own. He told me that the SSA urged him to apply for these retroactive benefits, and he received a lump sum payment in 2007.

His number is nowhere on the form, in fact the box where there should be a SS number is blank, her number is part of the claim number at the bottom of the form. Both people are in their 50's, she had a rapid growing cancer, and died within the year of being diagnosed. She refused to apply for SS benefits - too proud...

2006 was a joint return with high income, 2007 is a single return, income still would make SS partially taxable...

I'm inclined to leave it off entirely, since I have to option to claim it all in 2007, and she isn't filing in 2007...

Valarie

[Valarie]

Found it in Pub 915...

Lump-Sum Election

You must include the taxable part of a lump-sum (retroactive) payment of benefits received in 2007 in your 2007 income, even if the payment includes benefits for an earlier year.


This type of lump-sum benefit payment should not be confused with the lump-sum death benefit that both the SSA and RRB pay to many of their beneficiaries. No part of the lump-sum death benefit is subject to tax.

Not taxable to John at all is the way I see this...

Valarie

[Burke]

Thank you G, for your response..

Isn't the IRD only applicable if there is a 1041 filed?? There will be no 1041 in this case..

Just fishing, so if you have a cite, I'll be more than happy to research this..

Valarie

This is definitely IRD income and as such comes under the rules for filing a 1041 in my opinion, since it says a return must be filed if gross income is more than $600. After expenses, it would pass thru to the bene's per the will or intestate based on the DNI. I think the reason there is no SSN on it is that they did not have an EIN for the deceased's estate. Think about it, if there were no spouse and the estate passed thru to others (ie, children) would not it be handled this way?

[LMathey]

lump sum death benefit

I think that these are two different "animals". The lump sum death benefit is $250 which is payable to the spouse in the event that the deceased had enough credits.

I think you have a taxable payment in 2007.