We inherited a few thousand dollars in 2021 through distribution from a "simple irrevocable trust", after my spouse's mother passed away the previous year. The person handling various trust issues has just finished doing the final trust tax return, and has sent us and several other beneficiaries a Schedule K-1 (Form 1041) , "Beneficiary's Share of Income...", which I have never seen before and was not expecting.
My understanding was always that an inheritance is not considered taxable income, but after seeing the K-1 I am not sure what to make of it. On the K-1 itself, there are no numerical amounts contained in boxes 1-10 ... so nothing showing as far as interest income, dividend income, capital gains etc. There are only some small amounts with letter codes contained in box 11, which seems to indicate various deductions (but we always use the standard deduction, so I do not think this is relevant to us). The original distribution amount that we received is nowhere to be seen on the K-1, so does this mean that the distribution was not considered taxable and we don't owe anything on it as far as federal inheritance taxes/income tax?
Is there a special version of TT that I need to complete my 2021 return, or should we maybe talk to an accountant? Or does this a simple issue that does not affect our return in any way, meaning that all we have to do is just send a xerox copy of the K-1 along with our 1040 and thats it?
Any help would be greatly appreciated. Thanks.
