trust beneficiaries, california state taxes and K1's

[smishke]

I filed state (CA) and federal taxes for a family trust for TY2019 (TurboTax Business/trust).  They trust had income in 2019. I made distributions to the beneficiaries in 2019. There will be final distributions in 2020 since this is the year that the trust account will be closed.

I have two questions please,

1. I sent federal K-1's to all of the beneficiaries. It didn't occur to me until now, but should I also be sending the beneficiaries the California K-1 (541) as well?

2. On the California Fiduciary Income Tax Return 541, the line:

Taxable income of fiduciary. Subtract line 18 from line 17 is 0

I understand this to mean that each of the beneficiaries will pay CA tax on their respective portions of the trust income on the CA K-1 (and that the trust doesn't owe anything) . Is this correct?

[DianeC958 · Accepted solution]

1)  Yes, you need to send the K-1s for California to the beneficiaries as well.  There may be differences between the Federal and California K-1s.

2) Yes, if the trust distributed all of the income to the beneficiaries they pay the tax due as part of their person returns instead of the trust paying the tax at the trust level.

Estates and Trusts