Handling tax matters for a deceased individual can be complex, and 1099 forms are often part of the process. Executors and personal representatives must ensure that all income earned before and after death is properly reported to the IRS. Understanding how to manage 1099 forms for a deceased taxpayer is crucial for estate administration and tax compliance.
Who Receives the 1099 After Death?
If an individual earned income before passing away, businesses and financial institutions may still issue Form 1099 in their name using their Social Security Number (SSN). However, income earned after death—such as interest, dividends, or retirement distributions—should typically be reported under the estate’s Employer Identification Number (EIN) rather than the deceased’s SSN.
Common Types of 1099 Forms for Deceased Individuals
Executors may encounter several types of 1099 forms when settling a decedent’s financial affairs:
- 1099-INT (Interest Income) – Issued by banks for interest earned on savings accounts or investments.
- 1099-DIV (Dividends and Distributions) – Reports dividends from stocks, mutual funds, or investment accounts.
- 1099-R (Retirement Distributions) – Reports withdrawals from IRAs, pensions, or annuities. Some distributions may be taxable to the estate or beneficiaries.
- 1099-MISC / 1099-NEC (Other Income & Nonemployee Compensation) – Reports self-employment income, rental income, or other earnings.
- 1099-K (Third-Party Payment Transactions) – Issued for income from payment processors (e.g., PayPal, Stripe) if the deceased received payments through these platforms.
How to Report 1099 Income on Tax Returns
The way 1099 income is reported depends on when it was earned:
- Income earned before death is reported on the deceased’s final Form 1040 tax return.
- Income earned after death is reported on the estate’s Form 1041 (U.S. Income Tax Return for Estates and Trusts) using the estate’s EIN.
- If income is transferred directly to heirs or beneficiaries, they may need to report it on their own personal tax returns.
