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How do I handle a 1099R issued to an estate that has federal tax withheld?

This is not my area of expertise, and I appreciate any guidance. Thanks


    If the income is being distributed to beneficiaries, I would distribute the withheld tax also. Probably should attach a copy of the 1099R for the beneficiiaries returns too.


      Enter the income on Form 1041 Line 8 and the withholding on  Line 24e.


        Enter the tax withholding Form 1041-T and/or on the Tax Payments Worksheet, Part II Line 1c.


          Maybe some one here can help me with the answer. I cannot see how to apply WITHHOLDING to a beneficiary. I can apply ESTIMATES, but not WITHHOLDING.

          Am I missing something?

          • I believe the estate files the 1041 for a refund of any tax withheld.  Beneficiaries will receive their share in the future from the estate.
          • You cannot see how to do it because it can't be done.  The estate collects the refund and then divides it up among the beneficiaries, provided the tax preparer has been paid.
          • I have done it with no crises arising.  Obviously I shouldn't have done it the way I did, but the IRS didn't seem to know that. I think I'll be smart and not do it again. I made explanations on the 1041 and on the 1040 and attached copies of the 1099-R to the 1040 and the 1041. Only one beneficiary was involved.
          • Like I said, ESTIMATES I can do, but it does not look like WITHHOLDINGS can be allocated. The beneficiary will just have to wait for her money when the estate gets it.
          • I'm giving in to the two legal minds around here!  I may have done it and it worked, but apparently it was wrong. Mea culpa.
          • Bah, as long as none of your clients got a nasty letter from the IRS you must have done it correctly, right? :)

            The IRS does seem to have ways of moving money around from account to account internally so I wouldn't be surprised if a clueful IRS employee made this all work out.  I have a client with a nanny who used one of the online payroll services (run by a certain company who also makes tax software...)  Intuit had him filing 941s each quarter.  All it took was one phone call and the IRS rep was able to void out the 941s and apply the funds to the taxpayers 1040 (where we were filing Schedule H).  Until then I had no idea that was even possible.

            On the flip side, I'm currently dealing with a gay couple chasing their 2012 refund.  TP filed as single early in 2012 (before DOMA was struck down).  SP is my client and was on extension when the Windsor decision came out.  We amended TP 1040 to include SP K-1 income and estimated payments, and changed the filing status to MFJ.  Noted "Rev Rul. 2013-17" at the top of the 1040X hoping it might get routed to someone who knew what they were doing.  So much for wishful thinking.  The IRS rep that the client talked to today told him the return was processed but refund was "in a holding pattern" and that we "need to refile 2012, and it should be processed quickly."  Huh?

            "Insanity: doing the same thing over and over again and expecting different results."  --Albert Einstein

            I'm going to see if TAS can help on this one.  I'm not convinced that they're a viable entity anymore after all the budget cuts but it's worth a shot.  All I can see happening with sending in another copy of the 1040X is another 5 month delay while the IRS wonders why we sent them an amended return and didn't actually change any of the numbers in their system.  I thought about including a cover letter saying "we're sending this again because IRS employee #xxx told us to" but that's slightly less authoritative than "somebody on the Internet told me to do it this way."
          • I'll join the cleaning lady in the crime of the century - I've done it once or twice without any problems.
          • I admit to doing it once also, with many problems.  Four beneficiaries who had to wait four months for their refunds.  An IRS employee whose attitude was that it's a good thing they have smart people working there, to take care of stupid people's mistakes.

            So, if the question is "Can I get away with this?", the answer is a definite maybe.  

            Meanwhile, I am discussing on another forum the general ineffectiveness (other than writing reports) of the National Taxpayer Advocate.  Let us know if they help with your problem.  My advice:  Don't expect much.
          • I believe I found the answer on pg 27 of the 1041 IRS instructions for Line 24E.  If it's a 1099, which it is in my case,  you can enter the backup withholding on line 13B of the K-1, and it flows through to the beneficiary. Thanks, everyone, for your help.
          • But it is probably not backup withholding. It is probably regular withholding. Your solution may pass muster with IRS though,
          • I got it to enter on the Interest Income page of the 1041 as backup withholding on bank interest(even without bank interest income). Then it flows to Tax Payments w/s line 1a. I then added it to line 1c and it flowed to the beneficiary.
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