IRS, taxes, and SS

What is the name of your state?What is the name of your state?What is the name of your state? Missouri

My mother recently passed away (2006). She was eligible for social security widows benefits, but they were never paid to her. I was told to file an underpayment for my brother and I to receive this money that was owed to her.

She had a life insurance policy that she was gradually taking money out of for many years. The policy was finally closed in 2005, so she will owe the taxes on all the money she withdrew on the life insurance policy in the 2005 tax year.

I have a couple of questions reguarding this.

1- Am I responsible for filing her 2005 taxes?
2- Can the IRS take the social security money owed to her that is now coming to me and my brother to pay what she owes in taxes? (she did not own a house or car, she did not have any bank accounts, and no one in the family received any kind of inheritance or money after her death).

Any assistance and advice would be appreciated.

1. The executor is responsible for filing her final tax return.
2. Yes. The executor is responsible for paying any final taxes from the estate. Since the estate's only asset is the SS, it must be used to pay the taxes. If there's anything left, you can distribute that. If the SS is insufficient, the IRS is SOL, as an heir's responsibility for the decedent's taxes is limited to the value of that heir's inheritance.

Actually, the way the SS Administration functions, it could be at least three years after Mom's death before anyone sees any cash.

Pay the tax that is owed, and when the SSA is done calculating, they will issue checks, half to you and half to your brother.

Be sure to get the name and phone number of the person working the case. You will want to check in every 6 months or so until they finally send you your money.

Snipes

Thanks for the replies.
I do have a follow up question.

You had mentioned to pay the taxes and then have SS just send me and my brother the money. However, she owes taxes on $71,000. I can't afford to pay the taxes on that. So how will this work if the taxes aren't paid by April 15th? Will the IRS automatically take the SS money?

thanks

Hire an enrolled agent or estate tax pro. If she spent all the cash, you should file the final return & show the balance due. I suspect the IRS has a form to submit an offer in compromise for bankrupt estates. You'll probably have to list every asset she owned when she died, & what became of them. If there are any items of sentimental value, you could buy them from the estate for a fair price & send the $$ to the IRS.