My MIL died in October. My wife found out there was a checking account in her and her Mother's name. My wife didn't put any money into it and didn't even know about it. The bank has now taken her mother's name off it.
My MIL always paid income tax on the account's income. Presumably my wife is now responsible for it, but for the entire year, or from her Mother's death?
There isn't a whole lot of money involved, but I like to get it right. Thanks.
It depends whether it was set up as tenants in common or joint tenants. If the bank just took your MIL's name off without any other formalities, it sounds like they think it was joint tenants.
In that case, it's as though your wife owned it all along. The money in the account isn't income, since that was deposited by one or the other of the owners. The only income is interest on the account, which at today's interest rates is likely to be measured in pennies.
So my wife is on the hook for the entire year rather than just from October. We are talking about $500 for the year; I would like to put 3/4rds on MIL return as she didn't earn enough to pay taxes, but if I can't, I can't.
A final tax return should be filed for MIL for the time ending with her death. I believe it is due by the 15th day of the third month after her death. Your wife pays tax on the income generated after that date.
A final tax return for MIL is needed on April 15, not 3-1/2 months after death. Any estate tax return (if MIL had $5.3 million in assets + lifetime gifts, or less for some state estate tax returns) is due within 9 months of death.) It might be wise to have whoever the bank issued the 1099-INT to, issue a "nominee" 1099-INT to properly allocate the interest between MIL and wife.
Although it's on a multipart carbon, it can be hand-printed, if you don't have a mechanical typewriter. (I hand-printed a W2, and W3 transmittal form, for a household employee, which is a 6-part form; I think the 1099-INT is only a 4-part form.)
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