How can I get Turbotax to do adjustments for tax-exempt income? Turbotax allows adjustments for taxable dividends, but not for tax-exempt and the fund has both..

[holmes0wr]

A fund gives both taxable and tax-exempt dividends.  I need to allocate dividends between a deceased taxpayer 1040 and the estate 1041 from a single 1099. TT takes the tax-exempt and then my adjustment, but then overwrites this with the adjustment for taxable dividends.  I want 1040 line 2a to reflect the allocation.  Is there a way TT can do this automatically or do I need to add a STATEMENT to the return, saying why the number does not match the 1099 or alternatively why it does, but shouldn't.

[ScruffyCurmudgeon]

It would be best to enter the Form 1099-DIV as if you received two separate Form 1099-DIV, one for taxable and one for non-taxable.

The method that follows can be done for both taxable and tax-exempt, and do it all one process representing the totality of the Form 1099-DIV but for documentation it is advisable to act as if two separate 1099-DIV were received.  So text after tax-exempt discussion.

Then, for the Tax-exempt, the process involves:

1. In Box 11 of the entry, right click on the field (or CTL-I)
2. Open "Supporting Details" sheet
3. Enter gross tax-exempt dividends on first line,
   enter as a negative adjustment, to roll-out to the 1041, the amount of dividends received by the Estate,
   make sure to include the detail with the Estate's EIN
   Note that the line reading "in nominee" should be reported exactly on the Form 1041 Divident entry.
   
   

This does not work as well for taxable dividends because TurboTax does allow the Supporting Details sheet for Box 1 Taxable Dividends but not for Box 1b Qualified Dividends, so the best process is to again split the taxable dividends into those allocated to the Estate of the decedent to be reported on the Form 1041, and as if a separate 1099-DIV was received with only the dividends belonging to the live taxpayer.  Note the instruction about then reporting the taxable and qualified dividends on the Form 1041

[holmes0wr]

This answer is great.  One question.  Should the “supporting details” be submitted with the return? TurboTax has the option to NOT print these details, but the details do not print regardless of whether this box is checked or not, in my experience anyway.

[ScruffyCurmudgeon]

I would do the following:   1.  Save a PDF of everything - forms submitted, worksheets, supplemental and miscellaneous statements - when at the end you save a "Record Copy" as well as print-or-eFile a filing copy.  2. I would include (by unchecking "do not print") any such documents. 3.  Some of these supplemental sheets are transmitted, others not, but you will have a copy and a record that you did send back-up.

BTW, ??Recommend? the answer?