Filing a 2021 Estate Tax return (Form 1041) early in December 2021.

[renneberg]

My mother-in-law passed away in April of 2020.  She was living on SS income & had only a small amount of interest income, thus we did not have to file a 1040 for her.  The estate had less than $600 of total income (all bank interest income) in 2020 and thus we filed no 1041 for 2020.  We are filing a 2021 Estate Tax Return (1041) to show that her home sale in 2021 had no capital gain, thus less than $600 total income in 2021 also.  (The estate distribution to 4 beneficiaries is almost exclusively from the home sale proceeds as inheritance.)  We are trying to complete all activity in 2021 (including filing the tax return).  The 2021 Form 1041 is not out yet, but I found a guide that said we could use the 2020 Form 1040 for a partial year ending in Dec, by using the prior year's (2020) form & marking the period Jan 1 to Dec 5 (or something similar) & changing the YEAR at the top to "2021".  Can I do this with the 2020 TurboTax SW too (after printing it out, to mail it in)?  

I found two issues using TT 2020 for this:

1.  TT Business filled in the 1041 estate beginning date to be the death date in April 2020, and the end date to be Dec 31, 2020.   (This is correct, but we did not need to file an estate tax return in 2020.)  I propose to input all info as 2021 data & manually change these two dates on the form 1041 after printing it out.

2.  TT Business would not let me show the property sale date in 2021, for the 2020 1041 return.  (Also OK, but we are using the old form for the 2021 return and need the date to be correct.)  For this, I propose to simply enter the date in TT as a 2020 date, then change the year to 2021 manually after printing it out.

Are there any problems with this plan to fully close out the estate & 2021 Form 1041 tax return in 2021?

[Anonymous_]

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@renneberg wrote:

Are there any problems with this plan to fully close out the estate & 2021 Form 1041 tax return in 2021?

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Other than those you have previously discovered with the software, there really are not, given the facts set forth in your question.

As noted, you have to make changes manually and then, of course, print and mail the return. Also, your fiscal year end date should be on the last day of the month.

[Critter-3]

Personally I would wait for the 2021 program to be functional and file the return when efiling goes live next January ... this would make things simpler for all parties. 

[Anonymous_]

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@Critter-3 wrote:

Personally I would wait for the 2021 program to be functional and file the return when efiling goes live next January ... this would make things simpler for all parties. 

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I would agree, generally. However, since this is really just a zero return (i.e., the only transaction was the house sale that generated gross income but zero gain), it could almost be done by downloading the forms and preparing them manually.

[Critter-3]

Sale of the house probably created a loss when you add in the cost of sale   that can be  passed thru to the beneficiaries so it is probably not a zero return.  If so then the bene's don't want to amend a 2020 return so waiting for the 2021 program for them is a bonus. 

[Anonymous_]

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@Critter-3 wrote:

Sale of the house probably created a loss when you add in the cost of sale   that can be  passed thru to the beneficiaries so it is probably not a zero return.  If so then the bene's don't want to amend a 2020 return so waiting for the 2021 program for them is a bonus. 

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That is true and, most likely, worth the cost of buying the 2021 edition of TurboTax Business.

The actual amount of the capital loss, due to selling expenses, needs to be calculated.

[RJ82]

Your reply is helpful and I am hoping you have more info on TT Business.   I purchased 2021 TT Business to prepare 3 Form 1041s for my family.  I entered some basic numbers just to prepare for January live release of the tax forms.  When I started to set up the second F1041, it was picking up the first F1041 distribution amount and would not let me change.  There was no helpful information in TT support website.  Do you have any insight?  This is the first time I purchased TT Business.  Thank you for your help. 

[VolvoGirl]

Why do you need to prepare 3 1041 returns?   For 3 different Trust/Estates?   Or for 3 beneficiaries?   Didn't you start a New 1041 for the second one?   How did you start the second 1041?  Go up to File-New and do a brand new 1041 from scratch.

[RJ82]

Hi, thanks for your comment.  I need to file 3 F1041 because I have 3 different trust/estate with 3 different tax ID.  Each trust earned over $600 in 2021. For the second 1041 I went to file new and enter new tax ID; new beneficiary; etc.  When I tried to enter the specific distribution $ for the second 1041, TT Business would just go straight to "let's make sure your taxes are correct" and reflects the first 1041 distribution $.  I wonder if TT Business only allow 1 F1041 filing.  I've used Premier for years filing 3 or 4 F1040s.  This is my first time using TT Business.  Thanks for reading my post.  

[Critter-3]

Close out of the first 1041 and start a NEW one ... when you are done you should see 3 different return boxes looking at you on the home screen.  

[VolvoGirl]

No a new return should not pick up any other return info.  Don't know what you could be doing wrong.  You are trying to prepare the actual 1041 returns?  You never could use Premier or any personal versions to prepare the 1041returns.  You can only use Premier to enter a schedule K-1 you received from the 1041 return. into your personal return.   You might need to call in and ask.

Contact Customer Service
5am-5pm Pacific Time
Monday-Friday
https://support.turbotax.intuit.com/contact/

What is the Turbo Tax phone number
https://ttlc.intuit.com/community/using-turbotax/help/what-is-the-turbotax-phone-number/00/25632

[RJ82]

Hi Critter-3, Thanks for your comment.  For the second 1041, I changed the entity type to "complex" and was able to enter the distribution amount.  I previously chose the entity type to be "grantor" trust.  I was also able to set up the third 1041 as decedent's estate.  Thanks for  your input.  

[RJ82]

Hi VolvoGirl,  Thanks for your comment.  I don't know why the new 1041 would pick up the other 1041 distribution. However, after I changed the entity type to "complex" rather than "grantor", it solved the problem.  I am aware that Premier version is only good for 1040.  Thanks for the customer service contact info.

[renneberg]

I’m replying to let you know what happened.  I found that I could go into “Forms” mode & change the dates of both the period for the 1041 (to the 2021 period) and the date of home sale (to a 2021 date).  That took care of many of the corrections I would have to do manually.  (I did have to ignore the “errors” that TT reported in the final check, but it would print the dates correctly for a 2021 return.)  

In addition, I did have a loss due to the deductible sales costs, but the K-1s came out completely blank (didn’t pass the loss to the bene’s).  However, I saw that someone else had this problem & it was recommended to go to the Worksheet & enter the % distribution if it wasn’t there already.  There wasn’t a % for the normal income distribution, so I added the 25% for each & the blanks on the K-1s changed to the proper deduction pass-thru.

Thanks everyone for your help!

[renneberg]

Opening a new tax return should work - use the “FILE” menu, then  "OPEN NEW RETURN” menu item, press “SAVE” for the existing return (if needed) & then “START A NEW TAX RETURN".  In easy-step mode, I had to start all over, with the personal information like you’d expect & that is the first indication that you have started a completely new return.  I just used TT Business for both a partnership Business return (1065) and then a separate Estate Return (1041).  It worked fine for both.