Form 1041 Beneficiary Distributions

[JTB4]

Trust Account:  Trust Form 1099-R has a Taxable Amount (box 2a)and Federal Income Tax Withheld (box 4).  This is a final distribution.  Do I show the entire 2a Taxable Amount in the "Distribution to Beneficiaries" or subtract the amount withheld from box 4 as the Distribution?

[SabrinaD2]

For a final distribution from a trust account, you should report the entire taxable amount from Box 2a of Form 1099-R in the "Distribution to Beneficiaries." The federal income tax withheld (Box 4) does not reduce the distribution amount; it is simply the tax already paid on behalf of the beneficiaries.

Box 2a on Form 1099-R indicates the taxable amount of the distribution. This is the portion of the distribution that is subject to federal income tax.

Box 4 on Form 1099-R shows the federal income tax withheld from the distribution. This amount has already been paid to the IRS on behalf of the recipient.

[dmertz]

Note that because tax withholding cannot be passed through to the beneficiaries on Schedules K-1, if the trust is due a refund of some or all of the tax withholding the trust will need to remain open until the trust's tax refund is received and distributed to the beneficiaries.