How to File a 1099 for a Deceased Person
When someone passes away, there is a fiduciary responsibility for his employer to properly report payments made to the estate or beneficiary in the year of death on a 1099-Misc or 1099-R in accordance with the rules of the Internal Revenue Service. These payments are separate from a W-2, and will serve as documents of income which will be used by the estate or beneficiary when it is time for them to file their own taxes. The 1099-Misc will be filed by an employer, while a 1099-R will be filed by a retirement plan, such as a municipal pension plan.
Fill out the payer information. This includes the company name, address, city, state and zip code as well as the Federal ID, or Tax Identification number. This is a nine digit number with two digits, a dash, then followed by seven digits, found on the top left of the 1099-Misc or 1099-R form.
Fill in the recipient information. This will include the name and address of the estate or beneficiary, along with his Federal ID or Social Security number. This is found just under the payee information on the forms. If there is an adjoining account number, this should be included in the line provided as well.
Fill in the amount which was paid. For the 1099-Misc, this will be in box seven of "Non-Employee Compensation." For the 1099-R, this will be in box one titled "Gross Distribution."
Fill in any deductions which were removed from the payment. Both the 1099-Misc and the 1099-R have places for federal, state and local taxes. Based on the tax bracket of the individual, and the state and local tax codes, monies need to be removed and notated in those boxes accordingly. For instance, if the payment was $10,000 and the deceased was in the 28 percent federal tax bracket, his state had a six percent income tax and the local city charged one percent income tax, then the federal box would have $2,800 removed, state $600 removed and local $100 removed.
Fill in other boxes. Generally these are less commonly used on both the 1099-Misc and the 1099-R forms. For instance, if the deceased received a capital gain from the sale of stock shares, that would need to be notated in the appropriate box. If the employer made insurance premium payments on behalf of the deceased, and the money was not taxable, that amount would need to be notated in the box provided on the form.
Keep and send the 1099 form. One copy of the 1099 will be kept for your records. One copy will be send to the beneficiary or estate of the deceased.
File a 1096 form with the IRS. A 1096 is a form which combines all of the 1099's that an employer is sending out. It is a way to consolidate the amount of paperwork the IRS receives. On the 1096, the entire amount of federal tax which you paid along with the rest of your corporate return. If the business is in the following states: Alabama, Arizona, Arkansas, Connecticut, Delaware, Florida, Georgia, Kentucky, Louisiana, Maine, Massachusetts, Mississippi, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, Texas, Vermont, Virginia or West Virginia, then the mailing address is:
Department of the Treasury Internal Revenue Service Center Austin, TX 73301
If the business is in the following states: Alaska, California, Colorado, District of Columbia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Maryland, Michigan, Minnesota, Missouri, Montana, Nebraska, Nevada, North Dakota, Oklahoma, Oregon, South Carolina, South Dakota, Tennessee, Utah, Washington, Wisconsin or Wyoming, mail the 1096 to:
Department of the Treasury Internal Revenue Service Center Kansas City, MO 64999