- Mark as New
- Bookmark
- Subscribe
- Subscribe to RSS Feed
- Permalink
- Report Inappropriate Content
State tax filing
After finding the Right Click - Data Source feature and the Right Click - About Feature, I have further narrowed down what is causing this calculation error.
The amount and percentage in Colorado Form 105, Schedule B above come from the beneficiaries Colorado Sch K-1 Line 1:
The beneficiary's percentage of federal income distribution from the Smart Worksheet is correct. When I click on the data source, this percentage is coming from the Federal K-1, Line B1.
However, Line 1 of the Colorado Sch K-1 is incorrect. The dollar amount is the beneficiary's total distribution from the trust ($12323 see Line 11 of Fed 1041) and not the beneficiary's allocation of the federal Distributable Net Income (DNI) ($3551 (Line 7 Fed 1041) times the allocation percentage (1861 and 1690 respectively) for the beneficiaries).
For the Schedule B percent, this is taking the Line 1 dollar amount and dividing it by the Distributable Net Income. Since the Line 1 Dollar Amount is the total distribution and not just the Net Income distribution, the percentage is resulting in a value greater than 1 (100%). ($6,455 / $3,551 = 181.7798% and $5,868/ $3,551 = 165.2492%).
Following the data source for the Colorado Sch K-1 Line 1 Dollar and Percentage, takes me to the Colorado K-1 Worksheet:
Here, I find the $12,323, total federal distributions. When I click on Data Source, it just states this value is "From the total Federal distributions on Form 1041." When I click on the About K-1, it also states this amount is the total distribution:
The Colorado K-1 Worksheet Data Source and About do not explicitly state which line it is using from the federal tax form, I have correlated it to Line 11 of Fed 1041, Schedule B because it matches the value and is described as the Total Distributions.
While the labels on the Colorado K-1 Worksheet looks like it matches Line 11, the Colorado State DR105 instructions are different. For Schedule B of Colorado Form 105 is supposed to be the beneficiary's share of the Distributable Net Income, not the Total Distributions:
Based off the Form 105 Instructions, I believe TurboTax is incorrectly pulling the total distribution information from Federal1041, Sch B, Line 11. It should be using the Distributable Net Income from Federal 1041, Sch B, Line 7.
For a simple trust where 100% of the income is required to be distributed, Federal 1041, Sch B, Line 11 would work because it would match Line 7. However, for a complex trust that allows for income and principle to be distributed, this does not work. The value for the K-1 worksheet needs to be the actual Distributable Net Income from Federal 1041, Sch B, Line 7. This is because principle is not taxable because it has already been taxed for the trust.
I would appreciate your feedback if I have entered the federal information incorrectly, if TurboTax is pulling from the incorrect Data Source, or if there is something I am missing.