interest paid by IRS on refund of deceased taxpayer

[me112233]

Facts: 

(1) Taxpayer (husband) died in February 2020.

(2) Surviving spouse (wife) filed joint return for 2020 in April 2021.

(3) IRS required additional documentation, significantly delaying refund.

(4) IRS eventually paid refund, along with $166 in interest, joint payable to deceased and surviving spouse.

(5) IRS issues 1099-INT for $166 paid in 2021, in both names (noting that husband is deceased)

(6) The 1099 has only the deceased husband's Social Security number on it.

(7) This $166 was the only income that could be construed as income of the decedent for purposes of form 1041; since less than $600, no income tax owed by the estate.

Question:

Does wife, now filing single for 2021 tax year . . . 

(A) Include all $166 interest on her return.

(B) Include only $83 interest on her return, arguing it was half her deceased husband's income.

(C) Include $0 interest on her return, arguing it was all her deceased husband income, the estate owed no income tax, and she simply inherited the $166..

[sjrcpa]

The interest was earned on a joint 2020 tax refund so it is joint income - her and the decedent's estate.

If she inherited everything I'd put it all on her 2021 1040.

[jeffmcpa2010]

If she ended up with the $$ she should report it. 

[Camp1040]

Why is filing single an option for 2021 if the husband died in February of 2021? Include the interest on the joint 2021 tax return and no 1041 involved. 

[jeffmcpa2010]

Good point - totally missed that on my read through.

[me112233]

Sorry guys, the husband died February 2020.  I have corrected it in the original question.

[Camp1040]

Since it was a joint refund your SSN is somewhere in the background of IRS cyberspace. If you do not need to file a 1041 for your late husband's estate, just report the interest on your return and be done with it and move on.

[BobKamman]

I'm sorry, @Camp1040 , but you seem to have the wrong idea about voluntary compliance.  Haven't you learned that if it can't be traced, it's not taxable?  It's not whether you actually received the income, which obviously happened here.  It's all a question of what you can get away with.  If there is no piece of paper with your name and SSN on it, it didn't happen.  It's the American way!

[jeffmcpa2010]

Is BobKamman using sarcasm? What is the world coming to?  LOL

I like your post Bob. 😊