Allocating tax withheld on an estate 1099R to each beneficiary

Forum|Forum|1 year ago
March 9, 2025
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The deceased estate received a1099R for an IRA distribution. It show gross distribution on Line 1 and how much of Federal income tax withheld on Line 4. I, the executor, received the net distribution (gross distribution minus tax withheld) and distributed four equal checks to the beneficiaries. I figured out how to report the gross distributions in equal percentages to each beneficiary. However, I am having problems allocating the federal tax withheld on the Estate 1099R to show up on the individual K-1 schedules. How is that done?

TurboTax Business Windows

Best answer by dmertz

This tax withholding is not permitted to be passed through on Schedules K-1 to estate beneficiaries. The estate will need to receive the tax refund and then distribute the funds to the beneficiaries.

Because credit for such tax withholding is not permitted to be passed through to the beneficiaries, it's usually a mistake to have taxes withheld from a retirement distribution paid to an estate or trust unless the estate or trust will have a tax liability. Beneficiaries must instead be informed of the amount of taxable income they will be receiving so that they can make estimated tax payments if needed to avoid a tax underpayment penalty.

(The only tax withholding permitted to be passed through to beneficiaries is "backup" withholding, which is withholding demanded by the IRS or because the payee refused to provide a Taxpayer Identification Number.)

dmertzAnswer

Employee

This tax withholding is not permitted to be passed through on Schedules K-1 to estate beneficiaries. The estate will need to receive the tax refund and then distribute the funds to the beneficiaries.