Recent IRS Regulation concerning Excess Deductions on Termination of Estates

[gtdlhd]

I have the same issue with TT Deluxe.  I've updated it but the excess deduction still does not appear on the 1040.

[tagteam]

@gtdlhd Are you using the online version?

[gtdlhd]

No; a downloaded version.

[tagteam]

@gtdlhd In that case, see the post with the screenshot (above). You can make the entry in Forms Mode.

[gtdlhd]

Many thanks!

[luke622]

When I enter the amount in Box 11B, the amount does not reduce my taxes, and I am subsequently told by TT that I need to specify exactly what the deduction is for. It says to "search the topic," and then enter the number in that topic. That is completely meaningless. Where can you enter a Box 11B figure in order to get the amount entered on tax forms properly, and the deduction to take hold on your actual tax liability?

[tagteam]

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@luke622 wrote:

Where can you enter a Box 11B figure in order to get the amount entered on tax forms properly, and the deduction to take hold on your actual tax liability?

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Schedule A. The Deductions & Credits section of TurboTax and you need to know the precise nature of the deductions.

[luke622]

OK, but I thought using Turbotax meant you didn't have to fill out all the various schedules yourself - it's supposed to be done automatically. How do I fill out a form myself when they've all been generated by TT, and not me?  And WHERE on that form do I put it?

[tagteam]

Did you read the previous post?

You need to know the exact type of deductions. They are entered on Schedule A but you need to know what they are so you know where to enter them on that schedule.

[luke622]

Yes, I read it. But I see no where on the TT "Deductions and Credits" page to enter such a number. 

Also, WHERE on Schedule A is it supposed to go? Line 16? And my question remains: how do I enter something on Schedule A when I'm just using the Turbotax interview?

[luke622]

my specific Box 11B have to do with payment of excess state taxes. But I wouldn't have them in the state tax part of Sked A, since that is already maxed out. Excess deductions for a Trust aren't relevant to that anyway

[tagteam]

I am sure you can read the instructions as well as anyone - "on the applicable line on Schedule A (Form 1040). The fiduciary will provide you with a statement of allowable deductions."

See https://www.irs.gov/instructions/i1041sk1#idm140535812805104

[luke622]

well, there is no "applicable line" on Sched A to enter a Form 1041 K-1 Box 11B amount. IF you know where that line is, don't be coy, just tell me. Thanks.

Furthermore, there is no mechanism when using TurboTax to make entries to any form/schedule. It's all automatically populated by the Turbotax interview, is it not?

[tagteam]

You can make entries in Forms Mode if you are using a desktop version of TurboTax.

If the deduction was for state taxes paid and you have hit the limitation, then the deduction on Line 11B is essentially worthless. Otherwise, you would enter that in Step-by-Step under Deductions & Credits.

[luke622]

So, if I don't have the desktop version of Turbotax, I'm screwed? Score one for TT:(

I'm finding it hard to believe that a Trust's overpayment of state taxes, which are an allowable excess deduction, can't be recouped if the 5/10k limit on state and local income tax has already been reached. One has nothing to do with the other. And when the excess payment is subsequently refunded by the state, the feds are just going to see that as income to be taxed next year. 

Regardless, TT is a mess on K-1s, whether for Trusts or for MLPs. This is the last year I use it.