Taxpayer Died During 2007

[tonia2021]

Just want to make sure I understand how to do the tax return for a client that passed away during 2007. Do I do a 1040 tax return for the time that he was living? Then, do I prepare a tax return for the time after date of death until the end of the year - Form 1041?

All of the 1099s from the banks came in the client's SS Number. How does that get traced? Does the IRS match it with SSNs? If so, what happens when all the income doesn't show up on the 1040?

Also, there is some bond interest. I believe that the PR can choose to report that on the final 1040 - Correct?
Thanks

[tonia2021]

Additional question. Each bank sent a statement showing interest actually paid before date of death along with a total for interest accrued to date of death. Can all of this be reported on the 1040 - or only the amount actually paid.

[Gretel]

Part of the answers:

All interest reported in deceased SS# needs to be reported on 1040. Allocation for period after death needs to be backed out as nominee interest and ideally also 1099 mailed to estate with their TIN.

[tonia2021]

The bond interest is in the estate EIN - is there a problem with putting that on the 1040? If that election is available anyway.

[Gretel]

Do you mean for all year or just after death? All income after death (besides IRD) needs to be reported on 1041 unless it is below filing requirement.

[tonia2021]

On page 21-7 in TTB it says that an election can be made to report all accrued interest throught the date of death on the final 1040. This taxpayer's PR cashed in a 40,000 bond to have money available for expenses. Can this all be put on the 1040?

[Bees Knees]

On page 21-7 in TTB it says that an election can be made to report all accrued interest throught the date of death on the final 1040. This taxpayer's PR cashed in a 40,000 bond to have money available for expenses. Can this all be put on the 1040?

Assuming the taxpayer had not elected to report the bond interest annually, the interest on the bonds would go on the estate 1041 because they are cashed after death. However, there is a special election that allows you to report interest annually rather than wait until they are cashed. The estate can make this election so that all interest accrued before death goes on the final 1040 rather than the 1041. Interest accrued after death must still go on the 1041, even with the election.