topic Estate Filing - K-1 issues in Get your taxes done using TurboTax

Estate Filing - K-1 issues

jpenkoff — Tue, 02 Mar 2021 04:08:06 GMT

I finished my father's final estate taxes. However, when I printed the K-1's it does not show the amounts we inherited and no other amounts on the federal and state K-1's. He does not owe any taxes on his Federal 1041 and owes $40 on his Arizona Tax Form 141AZ. Do I have an error somewhere or did these print correctly?

Re: Estate Filing - K-1 issues

M-MTax — Tue, 02 Mar 2021 05:41:06 GMT

Taxes aren't owed when estates distribute inherited assets....only when there is income.

Re: Estate Filing - K-1 issues

Mike9241 — Tue, 02 Mar 2021 07:57:53 GMT

I finished my father's final estate taxes. However, when I printed the K-1's it does not show the amounts we inherited and no other amounts on the federal and state K-1's.

sorry for your loss.

it is not his 1041 it is his estate which either pays taxes on his income received after he died or the income it was distributed to the beneficiaries in which case there would likely be no federal taxes (can't say about the state) then the income would show up on the K-1 and be reported by the beneficiaries.

since we don't know anything about his assets, any income he earned before he died but received afterward like salary, or income earned post-death by the estate's assets we can't say if the returns were done correctly

Re: Estate Filing - K-1 issues

jpenkoff — Tue, 02 Mar 2021 12:06:34 GMT

Thank you for answering so quickly. So the sale of the house is considered investment income in TurboTax Business, we don't have to allocate the capital gains to the heirs? There was a capital gain of $1695 and 3 heirs of 40/40/20%.

Re: Estate Filing - K-1 issues

jpenkoff — Tue, 02 Mar 2021 23:44:25 GMT

Re: Estate Filing - K-1 issues

SamS1 — Wed, 03 Mar 2021 23:24:50 GMT

First, did you step up the basis in the house to date of death market value? Depending on the time the house was sold, there should not have been much if any gain after deducting the closing costs from the proceeds. Next, make sure you marked the return in TurboTax Business as "Final". There should not be any tax due on the final estate 1041 as all the income is passed out to the beneficiaries. Also, make sure and deduct all expenses on the final return including legal, court costs, and accounting. But yes, if you had income left in the estate, it should be passed out to the beneficiaries and taxed at the beneficiary level with each getting a K1 and not on the estate return.

Re: Estate Filing - K-1 issues

jpenkoff — Sat, 06 Mar 2021 19:34:09 GMT

Thank you for the added information. I greatly appreciate it!