Schedule K1 box 14 Code B

[Pghnow]

Please help.  I am doing an amendment to my 2022 taxes b/c I received a K-1 form.  So far, I was able to enter boxes 2a,2b,12 codes A, B, and J into TT,  but on box 14 code B, I am having trouble.  The attached form sent with the K-1 has info for box 14 including:  1.  Country (it is listed as 'other country' but Turbo Tax does not have that as a choice but I thought 'Various' would be the best choice.  Please advise if correct.   2.  Gross Income has an amount listed and I am not sure if 'Gross Income Sourced at Beneficiary Level: Foreign Source Income' is the best choice.  I did try to choose it, but then TT asks for 'Income Category' and that's where I am stuck.  Also included on that form is an amount listed under 'Qualified Dividends' and also 'Taxes' (paid on 12/31/2022.)   I'd like to know how to proceed with that information once I can get past the 'Income Category' etc. in TT.  Thanks.

[DaveF1006 · Accepted solution]

What happened is you received K-3 information in the K-1 that needs to be reported in Box 14 of your S-Corp K-1. For countries, various is a good choice to use if you don't have specific information to offer.

Now to determine how to enter specific classifications, you need to look at Part 11, Section 1, line 24 in that K-3 supplementary form to find out specifically how to report the information.and how the income is sourced. It will stipulate whether it is sourced from passive, general, other, partner level or all sources. 

Now your dividends would be reported as passive income in Column C on that same screen.. if you continue two screens over, this will allow you to report the foreign taxes that were paid. You would make the entry in the first box if the taxes are paid rather than accrued. You will need to read that statement that came with k-1 thoroughly to report this information correctly. 

[Pghnow]

Thank you.  So I should consider this an S-Corp and not a Trust which is why this K-1 was generated?  The Schedule K-1 I received shows under that title Form 1041 in parenthesis not Form 1120S.  

[JulieS]

No, if your Schedule K-1 says 1041, that is the type of K-1 you need to enter in the program. If there is a Schedule K-3 attached, it will provide you more details 

As for your questions: 

• You can use Various or RIC if no specific country is named.
• "Gross Income Sourced at Beneficiary Level: Foreign Source Income" is the correct choice since you are the beneficiary.
• Your income category is Passive. 
• You will be asked for the amount of foreign tax, whether it was paid or accrued and on which date. 

[Pghnow]

Thanks again.   After I choose 'passive,' I run into other issues.  I tried answering different ways but I must be doing something wrong because there is never a question about he date the taxes were paid.  Here is what I get after clicking 'passive':

If I don't choose any of these and click next, here is what I get: 

I did put in the tax amount from my form into he 'foreign taxes accrued' field but it never asked if taxes were paid and the date (BTW, they were paid and I have the date.)  The next couple of questions were about 2021 taxes which is not applicable to my situation.   Also, nothing changed so far on my taxes due (this is an amendment.). Is it possible the taxes were already paid from the estate?  Please advise and I do appreciate the help.   

Edit:  Here is a picture of the foreign tax credit info I received with the K-1.  In a nutshell, knowing what to do with this information is where all of my prior questions have arose.  Maybe that will help you help me.  

[HopeS]

Since the amount of Dividend entered is relatively small this could be the reason your taxable income and hence your tax liability did not change on your personal tax return.

If the version TT you are using does not ask for a date paid then move through the rest of the Interview and run your Smart Review to see if any filing errors.

You can also preview the return and confirm the Dividend is showing on the return before e-filing.

If you want to preview Schedule B (Dividend) please follow these steps (you might be asked to pay first):

1. Select Tax Tools on the left and then Print Center 
2. Select Print, save, or preview this year's return
3. Select Federal return
4. A window will pop up, scroll down to Schedule B

@Pghnow 

[Pghnow]

Thank you.  As far as the picture above showing Foreign Tax Credit Information, I don't know where to insert the $211 qualified dividends.  I can get passed the 'Country' and 'Gross Income' entries and that's where I get stuck.  Regarding the other two screen shots above, I don't know what to choose for Deductions Allocated and Apportioned at Beneficiary Level and if I don't put in a positive entry, the following section that pops up asks for Total Applicable Losses, Foreign Taxes Accrued and Reduction in Taxes Available for Credit.  I don't know how to answer that.  Finally, there is not a specific box that asks for Foreign Taxes Paid to put in the $19 entry.  Do you know where I would put that in?  I am hopeful I am nearing the end of my questions. 

[DaveF1006]

If this is for a trust account, qualified dividends are entered in Box 2B in your K-1 entry in the return. The foreign taxes paid are recorded in Box 14 with a code B. In Box 14, you will select the drop down arrow and select B , then record the amount.

When you prepare your foreign tax credit, this information should populate as you prepare your credit, assuming you prepared your K-1 prior to claiming the foreign tax credit. the $19 credit is already reported if you prepared the K-1. 

Scroll and report the entries until you reach a screen that says No other income or Expenses. Here if it asks do all the following apply to your foreign income and expenses, select yes. This will avoid the additional questions such as deductions Allocated and Apportioned at Beneficiary Level  Applicable Losses, Foreign Taxes Accrued, Reduction in Taxes Available for Credit etc. This is not necessary to claim the $19 foreign tax credit. Here is what the screen should look like.

Just make sure you complete the k-1 first before claiming the foreign tax credit.

@Pghnow 

[Pghnow]

In regards to the document below, do I have to include any of this information on my amended tax return?  If so, I know where to put the 'county' info in and also the $19 'taxes paid' but is the Gross Income and Qualified Dividends amounts required to be inputted?   Or is the $253 and $211amounts included in the amounts from the actual K-1.  Maybe that's the problem I'm having.  

[DaveF1006]

Yes, the amounts for gross income and qualified dividends should have already been reported on a K-1, as well as the foreign tax paid. 

Go to Box 14 and in the drop down, be sure the foreign tax paid is reported with a code B, from the drop down.  There should be a dialogue box that should open after that asking what country these were reported and then report the $253 as Gross Income Sourced at the Beneficiary Level: Foreign Source income as well as Gross income sourced at the beneficiary level. I would assume there was no source income-US sources.  if there was, it would be put in a disclosure statement. The point is that the Gross income sourced at the beneficiary level= US sources + foreign sources. 

If you don't know the country, pick various. The qualified dividend amount should have been already reported in Box 2B in the k-1. Then the income category should be passive.

As far as deductions,expenses, losses etc. that follow, ignore that part unless you have specific information to record there that you know about. For the $19, it isn't worth the bother.

Now if all of this is reported like it should be, your $19 foreign tax credit will be reported in Line 1 of Schedule 3 and Line 19 on the 1040.  There is no need at this point to claim a foreign tax credit because it is already claimed in your k-1.

I hope this helps.

@Pghnow

[Pghnow]

Thank you.  I'm moving closer . . . so I don't report the $211 Qualified Dividends anywhere (see photo of document in my post above)?   I assume those dividends are included in the $253 Gross Income, correct?  After inputing the $253 Gross Income, what form does it show up on in TT?

[DaveF1006]

It shouldn't appear anywhere on your return because this was only required for you to claim the foreign tax credit. It would have appeared on Form 1116 but this form did not generate because your credit was less than $300 MFS or $600 MFJ.

[JulieT6]

On Schedule K1 from a Trust and you are the beneficiary, use General Categoy Income for box 14 Code B.

Regarding your other question, "Various" is the best choice.

**Then TT asks some questions that seems to be related to S-corp K1's, not trust beneficiary, so leave those blank.

When you finish the K1 section and move on to filling out Form 1116, TT will ask you about Qualified Dividends and Foreign taxes paid. In Part II Foreign Taxes Paid or Accrued you would check "credit is claimed for taxes paid" since the Additional Schedule K1 information is reporting that you paid those taxes. 

**Box 2b is a subset of Box 2a on the K-1 so do not double count it. Good luck in your tax filing journey!