How to Handle SSA 1099 for Child's Survivor's Benefits After Custody Change?

This is actually a pretty common situation with SSA survivor's benefits when custody changes. The SSA-1099 follows the current representative payee (you) rather than tracking who received payments throughout the year. Here's what you need to do: You should only report the portion of the benefits that you actually received (Oct-Dec). Your aunt and uncle should report the portion they received (Jan-Sept) on their tax return. To handle this correctly, both you and your aunt/uncle should attach an explanation to your tax returns. Write a statement that explains the situation, noting the total amount on the 1099, the amount you actually received, and that the remainder was received by your relatives as the previous representative payee. Include their names and relationship to your son. Also, ask your aunt and uncle to prepare a similar statement explaining they received benefits from January through September as the representative payee, but did not receive the 1099. Both of you should keep copies of these statements with your tax records.

I had a similar issue last year with my nephew's SSA benefits and tried figuring it out myself. Wasted HOURS on the phone with SSA. Then I found this tool called taxr.ai (https://taxr.ai) that literally saved me so much stress. It has this thing where you upload confusing tax documents like your SSA-1099 and it breaks everything down for you. It spotted right away that I should only report the benefits I actually received as representative payee and explained exactly how to document the split with the previous caregiver. The tool even created a custom explanation statement that I could attach to my return. Made the whole process super simple when I was ready to pull my hair out!

Just wanted to update - I was skeptical about taxr.ai but decided to try it since my situation with my daughter's survivor benefits was similar (custody changed mid-year). Seriously impressed! It immediately recognized the SSA-1099 issue and guided me through exactly what to do. The tool actually created a custom statement explaining how the benefits were split between caregivers that I could attach to my return. Way more specific than I expected. It even explained how to coordinate with my ex so we both reported the correct portions. Definitely worth checking out if you're dealing with this kind of situation!

I understand your frustration with the SSA-1099 situation. I had almost the exact same issue with my grandchild's survivor benefits last year. After spending WEEKS trying to get through to someone at the SSA for guidance, I found Claimyr (https://claimyr.com). They got me connected to an actual SSA representative in less than 20 minutes when I'd been trying for days on my own. The SSA rep confirmed exactly what I needed to do about the mismatched 1099 and even noted it in my account. You can see how it works here: https://youtu.be/_kiP6q8DX5c It was such a relief to get an official answer directly from the SSA instead of stressing about whether I was handling it correctly!

I need to apologize for my skeptical comment earlier. After dealing with another SSA issue this week and facing a 3+ hour hold time, I gave Claimyr a shot. I was SHOCKED when I got a call back in about 25 minutes with an actual SSA representative on the line. The rep confirmed exactly what others here suggested - that I should only report the portion of benefits I actually received as representative payee, and explained how to handle the documentation. They even noted this in my account for future reference if the IRS has questions. Seriously saved me hours of frustration and gave me peace of mind that I'm handling this correctly. Sometimes being proven wrong is a good thing!

If your aunt and uncle received those benefits for most of the year, they should have gotten a 1099 as well. When I was temporary guardian for my niece, I got a 1099 for the exact months I was receiving the payments. Did you check with them to see if they got one?

I'm a little confused about who actually needs to report these benefits for tax purposes. Aren't SSA survivor benefits to a child not taxable to the child? I thought they were only potentially taxable if the child's other income plus half the benefits exceed the filing threshold?

This is a really complex situation, and I appreciate everyone sharing their experiences and solutions. As someone who works with families dealing with SSA benefits, I wanted to add a few practical points: First, the advice about only reporting what you actually received is correct. The IRS Publication 915 specifically addresses this type of situation where the SSA-1099 doesn't match who actually received payments during the year. One thing I'd suggest is documenting the exact dates when custody changed and when SSA was notified. This creates a clear paper trail. Also, keep records of any communications with SSA about the payee change - this can be helpful if questions arise later. For the written explanation, be very specific: include your son's name and SSN, the total amount on the 1099, the exact months and amounts you received vs. what your sister received, and the date custody officially changed. Both parties should reference the same details in their explanations to avoid any inconsistencies. Finally, if your son doesn't have other significant income, he likely won't owe any tax on these benefits anyway. But getting the reporting right is still important for your records and to avoid future IRS notices.