turbotax premier - K-1 for a trust distribution

Forum|Forum|1 year ago
March 30, 2025
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I am using TurboTax Premier - Using Form 1041 Schedule K-1 Worksheet - Estates and Trusts

I received a K-1 for a trust distribution which I am told is not a taxable event.

Checked - calendar year 2024

I selected E1 (Final form 1041 for trust) in Part I. I entered the amount on line 4a and the same negative amount on line 14 with code H in Part III

Checked - Domestic Beneficiary.

That amount shows up on Schedule D line 12. which I am told should be 0.

It increases my total taxable income by the same amount.

Requesting help determining why it is showing as income and how to correct it.

Thanks in advance.

PatriciaV

Employee

The income reported on Form 1041 Box 4a is a long-term capital gain, which is fully taxable. The credit reported for Box 14 Code H is an adjustment of that income for calculation of Net Investment Income tax. The two entries together eliminate your Net Investment Income so you don't pay any additional tax for that activity.

However, the Section 1411 adjustment (Box 14H) has no effect on your Form 1040 taxable income. You may wish to consult with the advisor who told you the Schedule D income was not taxable in case there is another way to report this credit.

Note that Schedule K-1 does not report any actual trust distribution you may have received. So that transaction is not reported as taxable income.

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