I am doing my elderly mother's taxes. On a quarterly basis she receives income from the trust of my late step-fathers estate.
After I enter the figures from boxes 1 ($11.00), 2a ($9,671.00), 2b ($2,657.00), 4a ($533.00), 12 (reason A - $0) and 14 (reason B - $106.00 and E - $9,682.00), I choose continue.
Then I'm asked "enter the following detail about the foreign income reported on your K-1". After that it says "Foreign Country or U.S. Possession" and has a dropdown box showing a list of other countries. I chose "not applicable" because K-1 form 1041 doesn't give that information
The next 3 fields ask for:
Gross Income Sourced at Beneficiary Level
Gross Income Sourced at Beneficiary Level: U.S. Source Income
Gross Income Sourced at Beneficiary Level: Foreign Source Income
I put zero in all three fields as, again, the 1041 form doesn't give such information.
I click CONTINUE
The next page asks "enter the category of income shown on box 14 of the schedule K-1 received from the ...trust"
There is a drop down box for choosing the income category. The choices are:
Passive Category
General Category
Foreign Branch Category
Lump Sum Distributions
Section 901(j) income
Inc. re-sourced by treaty
I have NO clue which to choose as, again, the 1041 form has no such information.
I chose "Passive Category" and clicked continue.
The next page asks to "enter the foreign tax information as shown on box 14 of the Schedule K-1"
It says "Deductions Allocated and Apportioned at Beneficiary Level:"
Then it has fields labeled:
Interest Expense: Total
Interest Expense: U.S. Source
Interest Expense: Foreign Source
Other Deductions: Total
Other Deductions: U.S. Source
Other Deductions: Foreign Source
Again, I have no clue, so I put zeros in all the fields and clicked continue.
The next page asks "Enter the foreign tax information as shown on box 14 of the Schedule K-1"
Three fields are listed:
Total Applicable Taxes
Foreign Taxes Accrued
Reduction in Taxes Available For Credit
Again, I have no such information, have no clue, so I put zeros in all three fields and click continue
Now I get a page called Passive Loss Carryovers - wanting me to enter figures for "passive loss carryovers from 2018"
I enter zero in both fields - as I have no such information on the 1041 form. I click continue.
The next page is "Qualified Business Income Carryovers". Well this certainly has nothing to do with my late step-fathers trust. So I enter zero and click continue.
This takes me to the "Estates and Trusts K-1 Summary" page, where I click DONE. Then CONTINUE. I get a page asking if I received a Schedule Q. I click NO. This takes me to "Your 2019 Income Summary".
I scroll down to the Business Items section. Next to the Schedule K-1 update button is the total figure and it shows $0. The total my mother received in income from the trust is $9,682. Turbotax clearly did not compute this correctly.
Please help me with this.
@taxchallenged2 wrote:
I scroll down to the Business Items section. Next to the Schedule K-1 update button is the total figure and it shows $0.
That is typical because the figures you enter from your K-1 into the program are distributed throughout various forms and, thus, the figure next to the K-1 will be $0. For example, the interest and dividend income from the K-1 will appear on Schedule B.
Also, the foreign income would generally be passive and sourced at the beneficiary level since the beneficiary received the income (as a distribution).
Thank you. That information finally seeped into my brain after I had posted this question. After entering the K-1 information I looked back at the income summary and noticed the 1099-int and 1099-div numbers had increased considerably from the smaller amounts that had been input from other interest and dividends she had from other sources.
I had all the same issues and questions as user taxchallenged2, however, I question whether the income category for Box 14 is really "Passive". At the beginning of the K-1 sequence, TurboTax asks the user to "Enter amounts from boxes 1 and 2" and includes Boxes for Interest, Ordinary Dividends, and Qualified Dividends. When I click on the explanatory link for "boxes 1 and 2" it says that the portfolio income is NOT passive and I don't see why it would be different for the "A-Tax-exempt interest" and "B-Foreign taxes" Box 14 codes. Here is the full explanation TurboTax provides:
"Portfolio income is usually income from investments.
It might be from interest, dividends, royalties, a real estate investment trust, a regulated investment company, other fund/cooperatives income, or income from the disposition of property held for investment.
Portfolio income is taxable to each beneficiary to the extent this income is reported on your Schedule K-1 for estates or trusts.
Portfolio income and losses are not considered passive, and portfolio income cannot be used to offset passive losses."
The reason I have for questioning this is that TurboTax fills out Schedule E with the name of the Trust, but it doesn't include any income or figures beyond that, and all the dividend and other income is appearing properly under Schedule B, etc.