Wife took a distribution this year from her complex trust for first time (no distributions required by trust), but the Schedule K-1 generated by Turbotax Business software for a 1041 and calculates distributions, gives an error message when this K-1 is entered into our 1040 personal return. Specifically, the qualified dividends (2b) total exceed the ordinary dividends (2a) total on the K-1 generates an error message when entered into Turbotax Premier software. In addition the K-1 lists some capital gain distribution (not all) for the 1040 which I am not certain is correct. I thought the 1041 would account for the entire capital gain.
First, qualified dividends can never be greater than total dividends. At best they can be equal.
Second, if your wife received a distribution from the trust then a portion of that distribution would be considered the capital gains and be taxable.
Reply from TurboTax employee does not answer the original question. Why is the K-1 generated by TurboTax Business generating an answer where the qualified dividends exceed total dividends on the form. Input for the 1041 return has total dividends greater than qualified dividends as would be expected from a brokerage statement. The problem is the output from TurboTax for the distribution is clearly wrong. Why.