We received a distribution from an inherited IRA, several thousand dollars. We received a K-1 for dividends but no 1099. How do we claim this money as income in Turbotax?

[VolvoGirl]

If you are using the Online version you need to use Premium to enter a K-1.

To enter a K-1 go to

Federal Taxes Tab or Personal (Home & Business version)

Wages and Income

Scroll down to S-corps, Partnerships, and Trusts or to Business items

Schedules K-1, Q - Click the Start or Update button

Be sure to pick the right kind of K-1. There are 3 kinds, 1041, 1065 & 1120S

[jmarkwhite]

I should have clarified - the K-1 only includes some dividend income, which is a much smaller number than the money we received as a payout. We didn't get any form reflecting the amount of the payout. I figured we should have received a 1099 but maybe I'm wrong? We asked and were told to just put in the K-1 info and then claim the payout as "other income" but I don't know how to do that without a 1099-R or anything.

[dmertz]

Did the estate receive the distribution from the inherited IRA or did you receive the distribution from the inherited IRA.  If the estate received a taxable distribution from the inherited IRA and passed income through to you on the Schedule K-1, it would be in box 5 as Other portfolio and nonbusiness income.  If you received the distribution directly from the inherited IRA in 2024, contact the custodian of the inherited IRA to obtain the missing Form 1099-R.

"We asked ..."

Who did you ask?  If you asked the estate's executor or personal representative and the a taxable distribution was paid to the estate, then distributed to you from the estate, this should have been entered on the estate's income tax return (Form 1041) in box 8 as Other income so that it would propagate to box 5 of the Schedule K-1.  However, if the estate paid deductible expenses, that might have reduced the amount of income taxable to the estate and the amount of taxable income passed through to you on the Schedule K-1.  If taxable income was passed through to you from the estate, it needs to be on the Schedule K-1.

[jmarkwhite]

The estate received the distribution and then passed income to us (my wife is the inheritor). The K-1 doesn't have anything in box 5. The only boxes with content on the K-1 are 1, 2a, and 14, and they account for interest income and ordinary dividends, with amounts that are far smaller than the distribution we received.

Re: the question we asked, we asked the estate executor. From your answer, it sounds like there should have been something in box 5 on the K-1. However, is it possible that the estate had sufficient deductible expenses that the taxable income for box 5 was reduced to zero? Or is that unlikely?

[dmertz]

"is it possible that the estate had sufficient deductible expenses that the taxable income for box 5 was reduced to zero?"

It's possible.  It depends on the amounts.  Of course if the person preparing the estate's Form 1041 simply failed to enter the taxable amount of the distribution, that means that the estate filed in incorrect tax return and would need to amend.

There is one other possibility:  If the estate uses a fiscal tax year rather than a calendar tax year and the distribution from the inherited IRA occurred during the estate's 2025 tax year (which would begin in 2024 and end in 2025), the income should be present on the next Schedule K-1 that you will receive which you would report on your 2025 tax return.

Either way, since you were told to just add it as other income on your tax return, I suspect that the estate's income tax return was simply prepared incorrectly and there should have been a taxable amount in box 5 of your Schedule K-1.  That suggestion definitely seems to indicate some lack of understanding on the part of the executor as to how the income should be (or was) reported on the estate's income tax return.

[jmarkwhite]

Ok, thank you - this answer will help me re-engage with the executor in a much more informed way.