1095 C Qualified widow

[nolanm]

Hi all

Filing as qualified widow for woman who's husband passed in 2020. Wife received a 1095C for debt forgiven in his name only.

He had no assets so there will not be an estate filing return for husband.

I can enter the 1095C on the qualified widows return - no tax effect as taxable income < $25k standard deduction. BUT I cannot check spouse or joint box on the 1095 C entry due to qualified widow status. Can only check taxpayer (wife) box - but 1095C was for debt in deceased spouse name only.

My thinking is just leave 1095C out completely. My concern is that IRS writes to her in due course re the 1095C = more work for me later explaining situation to IRS.

Any advice much appreciated,

Thanks Nolan

[sjrcpa]

If 1095C was in his name and SSN I would not include it on her return.

"He had no assets"?  No house, car, bank account? Whether singly or jointly?

COD income is income to his estate. If his estate was insolvent then its not taxable. But if estate assets subject to claims were transferred to wife before paying debt she could become liable.

EDIT: Ignore. I can't read today.

EDIT 2: Maybe I can read. OP said 1095C and cancellation of debt.

[qbteachmt]

1099-C is debt cancellation. 1095-C is health care coverage.

(to help with search results)

[sjrcpa]

Oops!

thanks.

[Just-Lisa-Now-]

If its in the name/SSN of a deceased person, that would go on his 2021 - 1041 estate return, not her 2021 1040.

Its a 1099C for canceled debt, a 1095C is for health insurance.

[nolanm]

yup my bad. 1099-C is what I have from client. 

[nolanm]

Than you Lisa. 

Debating as to whether I should do the deceased 1041, or hand off to their attorney.  Any idea of implications if 1041 filing is late? He passed April 2020 - I'm reading that was supposed to be filed by April 21. 

[Just-Lisa-Now-]

never too late to do the right thing, you'll also need to apply for an EIN for the estate.

[qbteachmt]

"Maybe I can read."

I think you read it fine. I was making a note to help clarify.

[BobKamman]

If the estate was insolvent, as you say, why would there be income requiring a return?

[nolanm]

What concerns me is that the 1099-C generates $5k of income for the estate in 2021. No tax will be due as there is no other income and the estate is insolvent. But  will the IRS not send a stream of letters to the widow (estate's address) re this 1099-C? 

[BobKamman]

It does not generate any income if the estate is insolvent, and you don't have to collect another fee from the widow just because of some unreasonable fear of IRS.  

[nolanm]

Why would you assume that I am trying to collect another fee vs doing the right thing/ helping the widow out?

The IRS does not know that the estate is insolvent as the widow has done nothing in this regard.