This post has been closed and is not open for comments or answers.

Can I use turbotax for form 1041 for irrevocable trust?

A revocable living trust became an irrevocable family trust on death of grantor.  I apparently need to file form 1041 for that trust.  In the past I have used Turbotax (and would like to continue) for our joint return with no difficulty.  What are my Turbotax options for the 1041 filing as well as my own 1040 filing?

Clarify, if possible, the confusion in my mind between Form 1041, 1065, and K-1s?
    From your question, I am going to guess that you are acting as Executor for the Decedent.  

    The Revocable Living Trust, RLT, which during the life of the Grantor was considered a "disregarded entity" and all income [and expenses] would have been passed directly through to the Grantor's own personal Form 1040.

    On death, the RLT does as you say become Irrevocable.

    Depending on whether or not the Decedent was married or not the answer will vary.  Assuming, for simplicity, that the Decedent was not married in 2011 and would have filed as Single, then the process is as follows.

    1.  A standard Form 1040 must be filed for the Decedent for the year 2011, with all income and expenses deductible from the beginning of the year up to the date of death ["DoD"].   You must indicate in the interview that this return is for someone who died in 2011 and enter the DoD.

    2.  In that Form 1040, it gets more complex if any of Form 1099-DIV/INT/B were received for the respective type of income.  You must segregate the income reported on these Forms into that attributable up to DoD and that attributable to the remainder of the year after DoD.

    3.  In order to avoid IRS questions about the Form 1040 Schedules B or D, it is advisable to report fully the total amounts shown on the Forms 1099 and then sub-total the respective types of income reported, and from that sub-total show on another line a deduction attributable to the reporting of the income on a Form 1041 that will be needed for the period of DoD to end of year.

    Thus, you will generate a Form 1040 for the period of the year during which the individual was alive.

    4.  Then, using the Business product, you will generate a Form 1041 Fiduciary Return [and possibly a required state form as well] for the ESTATE of the Decedent covering the period from Dod to either the end of 2011 [end of year] or to the date that Form 706 was filed or the Estate dissolved by distribution of assets - which ever is the earlier date.  If the DoD was November, it is highly unlikely that the Estate would have been dissolved in 2011, and may not even be dissolved in 2012.

    5.  The Form 1041 for the Estate must report all income that was received by the Decedent's Estate - that is, income, or expense, that was reported for the period subsequent to Dod up to the end of the year.  Please note that if income from the Estate was distributed to Beneficiaries, then you will be able to reduce the reportable income by that Distributed Net Income.  Similarly, Estate expenses will reduce the Income Tax on the Estate.

    If under the terms of the Estate, income is distributed to beneficiaries, that is shown as a deduction on the Form 1041, and the beneficiaries receive in the process generated Schedules K-1 for then reporting the distributed income on their own Form 1040.

    6.  Until the Estate is dissolved, Forms 1041 for each year must be filed.

    7.  Depending on the then-relevant Estate Tax law, an Estate Tax Form 706 may be required.
    • Am I correctly interpreting all this?

      1. So that I can prepare (as the trustee) an irrevocable trust return I need to use Turbo Tax Business.  This will create the trust return and will prepare the K-1.  By the way the trust income for 2011 consists only of dividends and interest which all will appear on a single K-1 to a single person.

      2.  I then also must purchase Turbox tax premier so I can prepare my personal tax return.  Premier because I have stock sale and rental property.  I do not receive the K-1 frm the trust.  It goes to someone else.

      But prehaps my situation is simple enough I can avoid having to purchase 2 Turbo-Tax products?
    In addition to a personal tax return product you need to buy TT Business.  Turbo Tax Business is a separate program from Home & Business.  It is not available to do online or on a Mac.  
    You can buy it here…..

    A 1041 is a tax return for Estates and Trusts
    A 1065 is a tax return for Partnerships
    Both of those will create the schedule K-1s that are given to the partners or beneficiaries.  If you receive a K-1 you need to manually enter it into your personal 1040 return.
      The H&R Block Home&Business product combines the Form 1040 and Form 1041 components into one marketing package, and I tried it a few years ago, because it was so much less expensive than the two TurboTax products.  Took the H&R back to Staples for a refund if you get my meaning.

      In TurboTax,  you would purchase one of the personal products [basic, deluxe, premium, Home& Business]  and also the separate Business product.  Your sequence is in fact correct.  The 1041 produces the K-1 and a beneficiary letter also.

      I suppose that if the 1401 is going to be very simple with no expenses or deductions and only interest and dividends and if you can understand how to calculate what is called "Distributable Net Income" [which is not necessarily the sum of what goes to the Beneficiary] you could do it by hand on IRS paper forms.

      s/ Scruffy_Curmudgeon - Not an Intuit employee -
      IAFF retired Firefighter(FF1/2)&Paramedic, -USAR O3 AIS/ASA '66-'67
      any/all thanks appreciated