Question

K-1 Not saving and Div moved to investment div

Forum|Forum|2 years ago
March 19, 2024
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I have a simple trust that distributes all income to beneficiaries. I am trustee and sole beneficiary. So I send myself a K-1 with the trust 1041 return. I enter the K-1 info as income in TT home and biz. But it doesn't save and it just shows zero. But the ordinary div I enter as from the K-1 instead shows up added to the ordinary dividends in the investments section. I suppose the tax effect is the same but won't it create a problem if the trust return shows a K-1 issued to my ssn but my personal return does not show a K-1 on the sched B nor is there a Form E generated?

TurboTax Home & Biz Windows

M

Mike9241

you have a grantor trust. there are 3 methods of reporting

A grantor trust can indeed file a Schedule K-1 for the sole beneficiary who also serves as the trustee. Let me provide some details:

Grantor Trusts:
- A grantor trust is a trust where at least one provision of IRC §§ 671–679 applies.
- The grantor (person who established the trust) is required to include all items of the trust’s income, deductions, and credits on their personal income tax return.
- If a beneficiary is deemed the grantor for income tax purposes (e.g., under IRC § 678), that beneficiary must similarly report the items taxed to the trust on their personal income tax return.
Reporting Requirements:
- Form 1041: Grantor trusts are subject to the same reporting requirements as non-grantor trusts.
  - If the trust has taxable income, gross income of $600 or more, or one or more nonresident beneficiaries, it must file an income tax return using Form 1041 within three and a half months of the end of its taxable year.
  - However, if the trust is a wholly owned grantor trust, it may use a simplified reporting method.
    - 1) Schedule K-1: Beneficiaries receive a Schedule K-1 to report their share of the trust’s income, deductions, and credits on their personal Form 1040 or 1040-SR.
    - 2) on the 1041 grantor trust is checked. a letter rather than a k-1 is produced which the beneficiary must reenter in their tax return (1040)
    - 3) instead of filing the 1041 with the grantor statement or k-1 – is that we can file a 1040, but to do that we tell the payor or we tell the partnership, in the case of entity that is issuing a K-1, the social security number of the grantor. This is the grantor’s name, and then this is the address of the trust. All that information causes the 1099 or the K-1 to go out directly in the name of the grantor. So, we avoid all of that otherwise reporting that we have to do. And there are a couple of additional requirements but if the grantor is serving as the trustee, we do not have any additional requirements