If you need to enter information from a K-1 you received, follow the instructions below but note that you will have to upgrade to the online version of TurboTax Premier (or use any desktop (CD/Download) version of TurboTax).
can I upgrade to Premier for the K-1 or do I need to purchase another turbo tax
@jcmohagen You can use TurboTax Premier. For more information on the forms included in Premier, see here: https://turbotax.intuit.com/personal-taxes/online/premier.jsp#tax-forms
1041 K-1: Trust and Estate Deductions
Since the trust and estate must report all income, deductions are available for amounts that must be distributed to beneficiaries. Form 1041 allows for an “income distribution deduction” that includes the total income reported on all beneficiary K-1s. You must prepare a Schedule B attachment for Form 1041 to take the deduction.
If the income distribution is discretionary, meaning the trustee or estate administrator has authority to decide whether beneficiaries will receive distributions, any income not distributed isn’t deductible on 1041 and is not reported on Schedule K-1. The trust or estate is responsible for paying the income tax on this income, not the beneficiaries.
Reading Schedule K-1
As the trust or estate beneficiary, you must include the amounts reported on your K-1 on your personal income tax return. Your K-1 will report each type, or character, of income you receive in various boxes of the form. For example, box 2a shows the amount of your income from ordinary dividends, and box 2b has the amount of box 2a that is qualified dividends. Therefore, these items would then be entered where dividend income gets entered, just as an example. So, for you, boxes 2a, 3, and 4a all get entered on the dividend income page of your personal return questionnaire (Personal > Personal Income > "I'll choose what I want to work on" > scroll down to "Business Investments and Estate/Trust Income" section > "Schedule K-1" click the "Start" button to the far right > Click on "Yes" > "Estates or Trusts (Form 1041) click on "start" next to this > and then follow it through all the way to ensure you've entered everything that is on the K-1 you received.
When you report these amounts on your 1040, you’re able to take advantage of the lower rates of tax that apply to qualified dividends for the amounts reported in box 2b. Some of the other income categories reported on the K-1 include interest earnings, long-term and short-term capital gains, ordinary business income, and rental real estate income.
Other K-1 information
The Schedule K-1 form may report information other than your share of income (or loss). Box 9, for example, shows the amount of depletion, depreciation and amortization deductions allocated to you. Schedule K-1 may also show tax credits in box 13, or the information you will need to calculate the domestic production activities income deduction you can take as an income adjustment on your 1040.
I bought TT Deluxe for 2021 and then received a 1041 K1 beneficiary form based on an inheritance from a family member. Will the Deluxe version guide me on where/how to enter the amounts or are there instructions. or do I need a diffferent TT program to handle the income entries? Thanks.
@RFD47
If you are using the CD/Download version of TurboTax Deluxe (installed on your personal computer), you will be able to report the information from Schedule K-1. The Premier version includes more specific guidance when entering a K-1, but the necessary forms are included in Deluxe for Desktop.
However, if you are using TurboTax Deluxe Online, you will need to upgrade to Premier. The forms need for this pass-through income are not available in Deluxe Online.
You can enter your K-1 by following these steps in TurboTax Online: