NOTE TO ADMINS: Not sure if this is the most appropriate section to post this question, please feel free to move it to the most appropriate one.


Good afternoon,

My step father (American, Florida resident) passed away in July 2016. My mother (non-resident alien or NRA living abroad) is the only beneficiary.

Last year, we liquidated his annuity funds from several institutions (Dreyfus, MetLife, Valic) since we were told that, given that the beneficiary is an NRA, my mother has no right to keep these funds open.

When filing the 1040 for FY 2016, these institutions sent 1099s (1099INV, 1099-R, etc) at my stepfather name and under his SSN, so we were able to do the last joint filing (husband and wife) easily.

This year, no one of them sent anything. I called all 3 of them and each one presented different criteria for dealing with the issue. Dreyfus said that they will issue a 1042-S (given my mother is a NRA), MetLife is not sure what happened that the 1099 wasn't issued (and they are working on that) and Valic said no tax form will be issued (hard to believe since they distributed money with no withholdings in 2017, and the IRS should be informed)

My 2 questions are:

1) Given that my mother is an NRA with an ITIN (instead of SSN), what form should apply to her for liquidating retirement funds? 1042-S? It seems that 1099s are for American citizens and residents.

2) Is it mandatory for financial institutions in the US to issue tax forms following withdrawals from retirement funds, regardless of the presence or absence of withholdings?

Thank you very much.

Andres

Last year, we liquidated his annuity funds from several institutions (Dreyfus, MetLife, Valic) since we were told that, given that the beneficiary is an NRA, my mother has no right to keep these funds open.=============>I guess it depends; your mother overseas can be treated as a US resident; I mean she can be treated as a resident alien(sine your father is a US resident), then he can use MFJ on Form 1040. If you father does, he and his spouse overseas spouse are treated as residents of US for the entire year. Then as a US resident yes your mother overseas can inherit the annuities. If not, then no , she can not. Also, if she is in the US, then, yes.because it is an inheritance a non-US citizen can inherit and can use a Tax ID to open her own account in the US. she will have to pay US taxes on any interest earned on the US accounts as a non-resident taxpayer.

When filing the 1040 for FY 2016, these institutions sent 1099s (1099INV, 1099-R, etc) at my stepfather name and under his SSN, so we were able to do the last joint filing (husband and wife) easily.=====>Then as you said she also needs to report her income overseas since he and your mother overseas filed their return as MFJ as mentioned previously.

This year, no one of them sent anything. I called all 3 of them and each one presented different criteria for dealing with the issue. Dreyfus said that they will issue a 1042-S (given my mother is a NRA),======>
I guess you need to let them know of this if your mother oversesad treated as a US resident..


MetLife is not sure what happened that the 1099 wasn't issued (and they are working on that) and Valic said no tax form will be issued (hard to believe since they distributed money with no withholdings in 2017, and the IRS should be informed)=> I guess also you need to contact hem to inform them your mother?s filing status if she was treated as a US resident.

My 2 questions are:

1) Given that my mother is an NRA with an ITIN (instead of SSN), what form should apply to her for liquidating retirement funds? 1042-S?========>>yes; Fixed or determinable, annual or periodical (FDAP) income, annuity, needs to be reported on form 1042S; US payors must file an information return, Form 1042-S to report amounts paid to non resident aliens.

It seems that 1099s are for American citizens and residents.========>then they will mail you a form 1099r

2) Is it mandatory for financial institutions in the US to issue tax forms following withdrawals from retirement funds, regardless of the presence or absence of withholdings?=========> The 1099r forms are to report the distribution of retirement benefits such as pensions, annuities or other retirement plans so you need to enter amounts from a Form 1099-R on yor 1040.

Thank you very much for your prompt answer, Wnhough

In fact, my mother is detaching from "fiscal residency" in the US, and is preparing everything (investments, real estate sales, etc) in order to be clearly considered as a fiscal non-resident.

She never lived there and had the ambiguous situation of being considered a fiscal non-resident (filing W8 forms on banks and institutions for her own money) but at the same time filing joint 1040s as the wife of an American resident in Florida.

To me, it looks like these financial institutions are not very much accustomed to accomodate such a special situations, thus they react in different ways.

In any case, your answer is very much appreciated. It seems that I should ask for a 1042-S and that these financial institutions must provide them.

Thank you very much.
Have a nice day,

Andres

She never lived there and had the ambiguous situation of being considered a fiscal non-resident (filing W8 forms on banks and institutions for her own money) but at the same time filing joint 1040s as the wife of an American resident in Florida.================>this isreally confused / misundersttod situation; once she filed her return jointly with her US citizen, then she doenst need a W8BEN.as said, in general, the ordinary filing status for a U.S citizen married to a nonresident alien is married filing separately, I mean M FS .The nonresident spouse, your mom, isn?t required to get a taxpayer ID number, ITIN or SSN # I mean . so in this case Your father can put ?NR?? for his spouse?s tax ID number on his US return. However, since your father is a US citizen then your mom can be treated as a US resident and she may jointly file US return with your father as MFJ; in this case she does not need a W8BEN since she is treated as a US resident; Form W-8BEN is filled out by non-resident aliens who do work( physically present] and/or make income in the U.S. so I guess she actually needs a W8BEN aslongas she is treated as a non resident US alien. NOTE;aslongas your mom is a non resident alien then she needs a W8BEN; however once she filed a US return with your father jointly , then she is a US resident and she does not need a W8BEN

To me, it looks like these financial institutions are not very much accustomed to accomodate such a special situations, thus they react in different ways.=========>>>>>I do no tblame ?em even I guess many of tax pros do not even clearly understand that kind of complex tax filing status situation

Yes, it's confusing. What I didn't tell is that my mother, well before marrying my late stepfather, invested in US securities and was required by US financial institutions to sign W8s. As many Latin Americans, she wanted to keep the money away from the local financial institutions because of unstable rules and recurrent financial crises (Mexico in 1994, Brazil in the late 90's, Argentina in the early 00s, etc).

Then, in one visit to the US to fill taxes a few years ago, they went to a famous chain of tax filing services and they were told to file tax reports jointly. That's when and why she got an ITIN.

Retirement funds have some strange ways to deal with liquidating assets and issuing tax forms. 3 weeks ago, Valic accepted that I send by fax a death claim form (signed by my mother and sent by postal mail to me in Canada, along with an authorization to deal on her behalf) and proceeded to liquidate the fund and send a check to my address. However, when calling last week to get a 1099/1042 form to fill her tax return, they make it hard to me to get the form, and they don't want to send it to Canada but to Latin America. Easy to get the money but hard to get the paper. Go figure...