Decedent's return of SS Pmt - how to handle on 1040

Technical topics regarding tax preparation.
#1
Jake  
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Person passed away in early December, the December payment was reclaimed by Soc. Sec. in January but the 1099-SSA does not reflect that. Do you just reduce the reported SSA benefit? I suspect I have not realized this in the past with the result that the last return over paid the actual tax. Or maybe as a cash basis taxpayer she is just s-o-l.
 

#2
Nilodop  
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IRS says it's an itemized deduction (if available) in the next year, which would be of no use. I've seen an argument (including by IRS in a Pub) that if it's over $3,000, you can apply section 1341. I wonder why, since that section requires that
it appeared that the taxpayer had an unrestricted right to such item
. But I'd take that approach anyway.

And if the person (estate, beneficiary, whatever) that repays it knew in the earlier year (after the death) that the SS payment has to be returned, I'd reduce gross income in the earlier year.
 

#3
Jake  
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Nilidop - Thank you. I had a situation with return of unemployment benefits due to an appeal by the employer. Taxpayer paid income tax on those one year, had to return it in the following year. But the return was only an itemized deduction and the taxpayer did not itemize. But I guess the tax year difference would not have made any difference anyway. This treatment seems "unfair" but who said taxes had to be fair. I happen to be the Executor of the estate involved in the original post. I am just going to follow the "unfair" route. I have enough to chew on with the interest, dividends, cap gain on the 1099's not matching the 1040 due to the portions that are IRD that go on the 1041. Thank you again for your wise counsel.
 

#4
Nilodop  
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The return of u/c benefits after an employer appeal is different because likely the recipient felt
it appeared that the taxpayer had an unrestricted right to such item
, whereas that's less likely to be the case for social security benefits in the month of death. But both are possible.
 

#5
Jake  
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The SSA-1099 report says the amount is the gross not returned in that tax year.

The taxpayer did not receive the December SSA payment until after the date of death. Maybe it should have been on the 1041. And the 1041 was for a fiscal year 12/8 ending 8/31. So technically it would have been a deduct from taxable income in that fiscal year. .

Still wondering if I should adjust the 1040. But in my heart I don't think it is worth the hassle for $350 or so in federal tax. A good academic exercise though.
 

#6
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If you can get your software to cooperate, why is it any different to backing out interest and dividends on a 1099 issued to the decedent instead of the estate?
 


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