IRD

All of my questions are involving IRAs. Does this forum answer questions about IRD? I have a client who received half her deceased mother’s unused vacation pay.



Client should receive a 1099 MISC from the employer and the payment will be taxable to the recipient.

My client did receive a 1099 MISC, the question is who is responsible for the taxes.

When my client’s mother died, my client received 50% of a lump sum and her stepdad received the other 50%. This was mostly unused sick and vacation time the decedent built up. Should this lump sum be included on the decedent’s final return, or is this income in respect of a decedent taxable equally to my client and her stepdad? From what I’ve read, it sounds like it can be reported either way.

The 1099 MISC forms should be reported on the return of the recipient. If the payment had been made to the estate, the estate must report the income. Of course, it’s not clear how the employer decided who to pay these benefits to.

Thanks for the detailed answer. That makes sense. Even if the payment was directed to the estate,  I am sure the money would have been distributed to the beneficiaries via a K-1 since the tax rates are punitive in an estate. They would also be responsible for the taxes in this instance.

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