A 1041? Decedents Will directed the Estate pay taxes on Estate Income earned. Can the Estate via 1041 pay federal income taxes due and thus no K-1s issued?

[RMClark55]

The Estate will earn between $20-25 K of income.  Most  of the income is dividends and Capital Gains from Stock sales after death. Does the 1041 allow for paying taxes due or do K-1's have to be issued to distribute income to beneficiaries.  

[Critter-3]

If the estate chooses to pay the taxes at the estate rate on the estate form 1041 then NO K-1 forms will be issued or required.  

[RMClark55]

Thank you so much for that information.  I have been using an older versions  of a tax software (TaxAct 2022) just to get a feel for the process.  The software isn't allowing me to continue unless I designate to whom to generate a K-1.  Do you know if TurboTax Business edition will do the same?  It's going to be a simple 1041 with less then $20K from once source.  Thanks again for your assistance.  

[Critter-3]

First you could use a paper form and mail it in if the return is simple and save yourself the fees. 

Next, the need for a K-1 is noted in the Business info section ... in the downloaded TT Business program you can switch to the FORMS mode if you cannot find that option in the interview screens. 

[RMClark55]

Thanks for the quick reply.   Forms Mode is a good idea.  Do you know if TT Business will calculate taxes due in Forms mode or will using tax tables be necessary?  I promise my last question on this issue 🙂

[Critter-3]

The program works in both modes the same   HOWEVER all entries should be made in the step by step mode and only required overrides should be made in the FORMS mode as overrides can keep you from efiling the return and will void the accuracy guarantee. 

[tagteam]

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@RMClark55 wrote:

Forms Mode is a good idea. 

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If the estate only has income from dividends and capital gains (and will pay any tax due), then you should not need to resort to Forms Mode.