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Hi Everyone,
Hope all your tax seasons are going fairly smoothly! I need some advice.
My clients husband died in 2022. She filed as Surviving Spouse in 2023 & 2024. This year she will file as HoH. She received a 1099-C for 2025 in the name and social security number of her late husband. I'm not sure where or if this even needs to be reported.
I don't think it should be reported on her return since the 1099 that was issued as well as the debt is in his name only. I could report it on the 1041 for the estate but the estate is insolvent and there's no option to fill in form 982 to exclude the income.
Any thoughts are greatly appreciated.
Thank you!
Skylane
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let’s start with some questions…
What is the nature of the debt? CC? Something else? How much? Date of event?
was it a joint account? If CC, did she use his card after he passed? Sounds a bit strange that 1041s would be filed for income in an estate when there’s a surviving spouse and kids….
somehow i think there’s a bit more to the story….stiffing a credit card company is one thing… I’d want to find out a bit more before i prepared the return or offered any thoughts
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It was a personal loan that the widow wasn't aware of until after her husbands death. There were a few instances of this.
I'm not exactly sure of the details, but I believe the estate attorney tried to get the debt discharged, but the bank refused at first and then filed suit. Only this year - after years of back and forth on this - did the bank agree to discharge the debt.
We were going to close out the estate last year but decided to keep it open and close it out this year.
I guess the good thing here is that the 1099-C was made out in the decedent's name only. It's not even made out to the estate. Part of thinks to just file it away and see what happens. The estate is insolvent anyway so there's nothing for the state or IRS to take.
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What do you mean, by "the estate is insolvent" ? Its liabilities exceeded its assets? Or it has no money left after distributing funds to beneficiaries? In that case the executor might be liable for the debt, unless funds could be clawed back from the beneficiaries. It's odd that an attorney would be fighting the bank over a debt when the estate was insolvent to start with. Maybe he's a family member.
