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twentysharon
New Member

How to report inheritance income schedule k 1 for 1041

 
13 Replies
tagteam
Level 15

How to report inheritance income schedule k 1 for 1041

"How to report inheritance income schedule k 1 for 1041"

 

In order to enter information from a K-1 with an online version of TurboTax, you need to upgrade to TurboTax Premier or Self-Employed (your profile indicates you are using TurboTax Deluxe).

DoninGA
Level 15

How to report inheritance income schedule k 1 for 1041

To enter a Schedule K-1

  • Click on Federal Taxes (Personal using Home and Business)
  • Click on Wages and Income (Personal Income using Home and Business)
  • Click on I'll choose what I work on (if shown)
  • Scroll down to Business Items (Business Investment and Estate/Trust Income using Home and Business)
  • On Schedule K-1, click on the start or update button

Or enter k-1 in the Search box located in the upper right of the program screen. Click on Jump to k-1

Or -

Click on Tax Tools on the left side of the online program screen.  Click on Tools.  Click on Topic Search.  Enter k-1 and on the highlighted result click on GO.

Wfjdi0r
New Member

How to report inheritance income schedule k 1 for 1041

I thought inheritance income was not taxed on federal forms. I filled out schedule k-1 form 1041 and saw that my my federal refund was reduced by $500+. The k-1 form I received showed an entry in box 5 and a negative entry in box 14 with a code 4. The Turbotax program had no such code and added to my tax liability when I filled this out in the TT program.

 

Can anyone help me with this.

Thanks

Frank

tagteam
Level 15

How to report inheritance income schedule k 1 for 1041


@Wfjdi0r wrote:

I thought inheritance income was not taxed on federal forms. I filled out schedule k-1 form 1041 and saw that my my federal refund was reduced by $500+. 


Box 5 on Schedule K-1 (1041) indicates the estate (or trust) generated income that was passed through to you as a beneficiary. The box 14 entry was likely a negative adjustment for NIIT (net investment income tax) which will probably not affect your return.

 

An inheritance is generally not taxable to the heirs except when the estate (or trust) itself generates income or gain that is passed through to the beneficiaries (who are then liable for any income tax due).

Wfjdi0r
New Member

How to report inheritance income schedule k 1 for 1041

So if that what was done here, then it is taxable? Why is the same amount shown as a negative number on line 14 with a code 4?

 

The accompanying NYS K-1 shows that there is no taxable income.

Can you clarify for me.

 

Thanks,

Frank

Wfjdi0r
New Member

How to report inheritance income schedule k 1 for 1041

I have the Home and Business edition. 

VictoriaD75
Expert Alumni

How to report inheritance income schedule k 1 for 1041

Under Wages & Income, review the menu for Business Items. Click Start next to Schedules K-1, Q. Answer Yes to Do you want to review Schedules K-1 or Q?. Click Start next to Estates or trusts (Form 1041).

 

Enter the Name and Address on the following screen. Enter the ID Number from the K-1. Designate Domestic or Foreign Beneficiary. Designate the time period used. Enter the information as it pertains to the K-1 received, including the negative amount in box 14. 

 

IRS Instructions Schedule K-1 Form 1041

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tagteam
Level 15

How to report inheritance income schedule k 1 for 1041


@Wfjdi0r wrote:

So if that what was done here, then it is taxable? Why is the same amount shown as a negative number on line 14 with a code 4?


It should not be a code "4", it is most likely a code "H" and that is a negative adjustment on Form 8960 which is a good thing (although it only comes into play at higher income levels).

 

Regarding the figure in Box 5, that amount is taxable.

sabastedo1
New Member

How to report inheritance income schedule k 1 for 1041

I have a Schedule K-1 from an inheritance I received. I entered the amount and then on Line 14 I entered the letter H and then a negative number which was on the form. Then the next question I do not understand and do not know what to put in there.

sabastedo1
New Member

How to report inheritance income schedule k 1 for 1041

Does that mean I have to buy another version of Turbo Tax?

sabastedo1
New Member

How to report inheritance income schedule k 1 for 1041

How do I upgrade to the Turbo Tax Premium?

tagteam
Level 15

How to report inheritance income schedule k 1 for 1041


@sabastedo1 wrote:

How do I upgrade to the Turbo Tax Premium?


Which version are you now using? If you are using an online version of TurboTax, you need Premier or Self-Employed to enter a K-1; you should be prompted to upgrade.

 

You can use any desktop version to enter a K-1.

tagteam
Level 15

How to report inheritance income schedule k 1 for 1041


@sabastedo1 wrote:

.....the next question I do not understand and do not know what to put in there.


The subsequent questions relate to loss carryovers of which you would most likely be aware if you had them.

 

Contact the trustee if you are uncertain.

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