topic Queston on K-1 form 1041 for an estate in Get your taxes done using TurboTax

Queston on K-1 form 1041 for an estate

rvhatcher — Mon, 30 Mar 2020 15:44:16 GMT

My aunt died and I got some money that was reported on a K-1 form 1041. I was told by the executor that all taxes had been paid. Line 5 shows 24,000 line 14 code H shows -24,000. Not being an expert is seems to me that the two should offset but TT is showing I owe taxes on 24,000 at a whopping 30.6% far above my normal bracket.

Line 14, code H says "Adjustment for section 1411 net investment income or deductions" so it seems it should offest.

I'm confused. I'd rather not pay $7,000+ if I don't have to. Can someone help me understand this?

Re: Queston on K-1 form 1041 for an estate

Anonymous_ — Mon, 30 Mar 2020 17:00:09 GMT

@rvhatcher wrote:
Line 14, code H says "Adjustment for section 1411 net investment income or deductions" so it seems it should offset.

That is a negative adjustment on Form 8960 so it should reduce your NIIT liability, but not your overall income tax liability. Ensure that you are entering the figure as a negative number (e.g., -24000) in the program.

Re: Queston on K-1 form 1041 for an estate

rvhatcher — Mon, 30 Mar 2020 17:12:34 GMT

Thanks for your help. We are far below the threshold for NIIT. What's the difference between "NIIT Liability" and "overall income tax liability".

Also, I don't have a Form 8960 so I am not sure what you mean by that. I have a Form 1041.

Yes, I have entered it as a negative.

Re: Queston on K-1 form 1041 for an estate

Anonymous_ — Mon, 30 Mar 2020 17:39:03 GMT

@rvhatcher wrote:

We are far below the threshold for NIIT. What's the difference between "NIIT Liability" and "overall income tax liability".

In short, it is an additional 3.8 percent tax on net investment income.

See https://www.irs.gov/taxtopics/tc559

If you are below the threshold then the negative figure will have no effect; it does not offset your tax liability on the $24,000 on Line 5.

Re: Queston on K-1 form 1041 for an estate

rvhatcher — Mon, 30 Mar 2020 19:11:11 GMT

Ouch, I see it flows through to my Schedule E too. thanks for your help.