My father passed and I received a distribution from the revocable living trust. Because the 1099R shows as paid to the trust but the distribution was to me and my sister, there is a disconnect between the 1099R and where the income needs to be reported.
To avoid confusion at the IRS, attaching a scanned copy of that 1099R would be helpful.
Because the the name was issued in the name of the trust, you would need to file a 1041 trust return. From the trust return, K-1's will be issued to you and your sister to report in your own individual tax returns.
You would need to purchase Business software to file a Form 1041 as this is unavailable for personal returns. Turbo Tax Business has an online platform but it is a bit pricey. You can explore this option here. Turbo Tax also offers a download software to be installed on your computer. You can view that here.
Attaching a copy of a 1099R with your personal tax return will not solve your issue. It may take the IRS time to respond back to you but they will inform you that a 1041 form needs to be filed.
I have done the 1041 but a revocable living trust is a grantor trust. It is a decedent estate and the initial and final Form 1041. According to the instructions, I just add an attachment showing how the income was distributed. Then the beneficiaries (my sister and me) enter the distribution information in our personal returns. I have to file a paper return because my SSN is currently locked (SSA screw up in 2022 still having it's effects) so attaching a copy of the 1099R in question isn't an issue. But my sister is filing online and it would be helpful if she could attach a scanned copy of the 1099R in question to her return. We would like to avoid as many dealings with the IRS as possible as the amount is a pittance!
So is it or is it not possible to attach a document to an online tax return?
@britehopes wrote:
I have done the 1041 but a revocable living trust is a grantor trust. It is a decedent estate and the initial and final Form 1041. According to the instructions, I just add an attachment showing how the income was distributed. Then the beneficiaries (my sister and me) enter the distribution information in our personal returns. I have to file a paper return because my SSN is currently locked (SSA screw up in 2022 still having it's effects) so attaching a copy of the 1099R in question isn't an issue. But my sister is filing online and it would be helpful if she could attach a scanned copy of the 1099R in question to her return. We would like to avoid as many dealings with the IRS as possible as the amount is a pittance!
So is it or is it not possible to attach a document to an online tax return?
I can't address whether it is required in this situation because I haven't worked with this issue. But Turbotax has made a policy decision that they do not allow attachments for e-filing, even though the IRS allows them in some situations. I have heard there are other tax software programs that do allow attachments (I don't know which ones and I don't endorse any specific product). Or, use a professional this year, or file by mail.
I have done the 1041 but a revocable living trust is a grantor trust. It is a decedent estate and the initial and final Form 1041. According to the instructions
OK, which one is it? An estate or a trust? A revocable living trust is NOT a grantor trust after it becomes irrevocable due to the death of the grantor.......a 1041 needs to be filed with K-1s issued. Likewise with the estate.....you need to file a 1041 and issue K-1s to the benes.