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Returning Member
posted Jun 12, 2021 11:06:20 AM

Trust Beneficiary Credit for Backup Withholding

I wish to allocate backup withholding tax paid by a trust to the trust's beneficiaries. IRS instructions for line 14 of Form 1041's Schedule G say that backup withholding can be distributed to beneficiaries by reporting a credit on Schedule K-1, box 13, code B for each beneficiary. As best I can determine, however, TurboTax Business makes no provision and provides no guidance for such a step and when I make manual entries in box 13 of Schedule K-1, TurboTax makes no adjustment for claimed withholding tax on Form 1041, leaving me in the untenable position of claiming a credit for backup withholding on the trust's Form 1041 while simultaneously allocating a credit for this withholding tax to beneficiaries. TurboTax generates no error message when I do so,  effectively allowing me to claim a credit for withholding tax twice. Obviously, this cannot be right. What is the solution?   

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1 Replies
Level 12
Jun 12, 2021 11:48:33 AM

Most professional software doesn't do this type of calculation either so you've got to do this in forms view I would have to assume.