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Complex trust: turbo tax does not change K1 forms when qualified dividends split between trust and beneficiaries (line 2b)

Forum|Forum|2 years ago
March 3, 2024
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I am the trustee of a complex trust.

I entered the qualified dividends on line 1b. I want to attribute some to the trust and some to the beneficiary.

However, the values for beneficiary's share of current year income etc. is the same whether ALL or SOME of the qualifies dividends are allocated to the beneficiaries vs. the trust. This does not make sense.

How can some of the income be allocated to the trust so that the trust pays the tax?

TurboTax Business Windows

Best answer by Anonymous_

BINGO. OMG here's the problem. In TT it asks for second tier distributions. It fails to say that this value should ONLY be from the DNI--instead, I and others likely included ALL distributions which of course force ALL dividends and interest to go to beneficiaries. I searched the online forum and saw a post about this from a few years back. TT should change wording to indicate ONLY include distributions from the DNI (interest and dividends) NOT trust corpus. I guess the IRS doesn't really care what is distributed from the trust corpus and there's no where on the 1041 to include that, which makes sense since it is not taxable income.

A

Anonymous_

@Oak_Fid_Agent wrote:
How can some of the income be allocated to the trust so that the trust pays the tax?

When you make a distribution in the program, you can make a selection as to how much (or what percentage) is allocated to the beneficiary(ies).

The qualified dividends will follow the ordinary dividends (in proportion) as qualified dividends are merely a subset of ordinary dividends.

O

Oak_Fid_AgentAuthor

I overrode the program and entered a dollar amount on line 2b for the beneficiaries and a dollar amount for the trust. The values on the K-1 form were identical to whenn all of the dividends were automatically allocable to the beneficiaries.