Estate Form 1041 - $600 Exemption

[LK2023]

I'm filing a First and FInal Federal Form 1041 for an Estate, with All Income being Distributed, so $0 Taxable Income and $0 Tax Due.   But I still expected a prompt for the $600 Exemption, or to have TT fill it in. I added it manually through Forms, even though that just results in -600 as Taxable Income on Line 23, but I thought that was "correct." It seemed like an omission to leave off the exemption. But I saw a 2022 post from tagteam that the omission of the exemption actually might be the correct path when you have All Income Distributed? Is TurboTax simply not prompting for or filling in the $600 exemption b/c it is not necessary and accomplishes nothing in cases of total distribution, or is it actually incorrect to use it in this case? I am paper filing (b/c of required attached Statement) and printed it out WITH the $600 Exemption included. It makes no difference in the result, and TurboTax reviewed the return and said it was okay.  I can't tell if this is necessary, unnecessary, or just plain incorrect.  Please advise if this is incorrect, and I should change this and take off the Exemption before I mail in the return. Thank you!

[DianeW777]

No, you do not need to take it off and reprint.  Although it's not necessary to use it when there is no income and all is being distributed to the beneficiaries, it has no affect on the tax return.  You can feel confident to mail the return as is and the IRS will have no problem with that entry.  

[tagteam · Accepted solution]

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@LK2023 wrote:

Please advise if this is incorrect, and I should change this and take off the Exemption before I mail in the return. 

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Yes, remove the exemption because it is not applicable in your case (i.e., where all income, et al, has been distributed).

[LK2023]

Okay, tagteam, thank you.  I removed the exemption. (Is there some place in the IRS instructions where we are instructed NOT to include it if there is a total distribution?). Also, I hoped that one change would mean I would just have to re-print that one page of the Form 1041. But I noticed the K-1 now is slightly different. For some reason, it now includes a ZERO in Net Short Term Gains for no obvious reason. So I guess I need to print out a new K-1 too. Maybe I'll just print out the whole Federal 1041 and NJ 1041 again to be sure any other little changes are included. 

[LK2023]

Also, after I removed the exemption and re-saved the return, kind of weirdly the return still has 4/7/2024 as the date by the signature line, even though today is 4/9/24, and the Executor now needs to re-sign.  Perhaps because I printed as though to file on 4/7/2024?  I hope that's not a problem. I am done and plan to mail tomorrow. Thank you for all your help.

[LK2023]

Never mind what I said about tne Net Short Term Gains, that apparently was filled in as Zero before. I am totally cross-eyed at this point. I'm re-printing out  Page 1 of the Form 1041 with the exemption removed, having the Executor re-sign tomorrow b/c this is the signature page, and putting this in the mail and to bed.