K-1 trust income

The $4,097 would be foreign income and the $352 would be the foreign tax on that income. Gross income sourced at the beneficiary level would be your income as reported in boxes 1 through 8, less box 2(b) since it is included in 2(a). I think you will also be asked to break that out between US sources and foreign sources. If so, the US source income will be the total income less the foreign income of $4,097.

Hi Thomas, thanks so much for your helpful response! The thing that's confusing to me is that boxes 1-8 are empty, as you can see in the first photo. So if I summed those up as you suggest, the value would be 0, despite the fact that the supplementary statement shows that foreign income listed as $4,097. Does this mean there is a mistake on the k-1 form, or am I misunderstanding something? Thanks again, much appreciated!

The foreign income information is used to determine the amount of foreign credit you will be able to claim this year. It is reported as Foreign Income as you complete the ZZ information required in Box 14 of your K-1. 

 

Now you will need to record this same amount in the section where you will claim your Foreign Tax Credit. Here is how to claim the credit.

 

1. Go to Wages and Income
2. Deductions and credits 
3. Estimate and other taxes paid 
4. Foreign Tax Credit>start or revisit
5.  As you go through the screens, when it asks "Tell Us About Your Foreign Taxes" select none of these apply.
6. When it asks if you wish to take the deduction and credit, take the credit.
7. Continue through until you reach a screen that says "No other income or expenses" Say no
8. Continue through until it asks the income type, say Passive Income
9. Next add a country pick XXX.
10. Now go through the prompts; there'll be a screen asking for the Gross Income and the foreign tax paid on the income.
11. Continue through the section until you are done.

There is no mistake on the K-1.You may use it to report the information you need. There are no entries required for Boxes 1-8 to report your K-1.

 

Hi Dave, thank you so much for this helpful and thorough explanation of how to claim the foreign tax credit! And so then my last question is when Turbotax asks me to enter the "Gross income sourced at the Beneficiary Level" on the k-1, would that be 0 (the sum of boxes 1-8), or $782 (from box 14 A), or $4,097 (from the ZZ statement)? Thank you, again!

Hi there, so when Turbotax asks me to enter the "Gross income sourced at the Beneficiary Level" on the k-1, should I enter 0 (the sum of boxes 1-8), or $782 (from box 14 A), or $4,097 (from the ZZ statement)? Many thanks, again!

Yes, it would be $0 since there is no income listed on the K-1 Schedule. The foreign income is just what the foreign tax was paid on. It may not be taxable on your US return or it may have come from accrued income that is not taxable in the current year, so it is possible to have $0 income but still have paid foreign taxes in the current year.