Queston on K-1 form 1041 for an estate

[rvhatcher]

My aunt died and I got some money that was reported on a K-1 form 1041.  I was told by the executor that all taxes had been paid.  Line 5 shows 24,000 line 14 code H shows -24,000.  Not being an expert is seems to me that the two should offset but TT is showing I owe taxes on 24,000 at a whopping 30.6% far above my normal bracket.

Line 14, code H says "Adjustment for section 1411 net investment income or deductions" so it seems it should offest.

I'm confused.  I'd rather not pay $7,000+ if I don't have to.  Can someone help me understand this?

[Anonymous_]

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@rvhatcher wrote:

Line 14, code H says "Adjustment for section 1411 net investment income or deductions" so it seems it should offset.

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That is a negative adjustment on Form 8960 so it should reduce your NIIT liability, but not your overall income tax liability. Ensure that you are entering the figure as a negative number (e.g., -24000) in the program.

[rvhatcher]

Thanks for your help.  We are far below the threshold for NIIT.   What's the difference between "NIIT Liability" and "overall income tax liability".

Also, I don't have a Form 8960 so I am not sure what you mean by that.  I have a Form 1041.

Yes, I have entered it as a negative.

[Anonymous_ · Accepted solution]

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@rvhatcher wrote:

We are far below the threshold for NIIT.   What's the difference between "NIIT Liability" and "overall income tax liability".

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In short, it is an additional 3.8 percent tax on net investment income.

See https://www.irs.gov/taxtopics/tc559

If you are below the threshold then the negative figure will have no effect; it does not offset your tax liability on the $24,000 on Line 5.

[rvhatcher]

Ouch, I see it flows through to my Schedule E too.  thanks for your help.