TurboTax for Business is splitting qualified dividends between beneficiaries and the trust. For a simple trust they should only go to beneficiaries. How do I fix this?

Forum|Forum|3 years ago
March 16, 2023
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On form 1041, line 2b (1) it shows most of the qualified dividends going to beneficiaries and on 2b (2) the rest of the qualified dividends going to the trust. I have told turbotax that 100% of income is supposed to go to beneficiaries. I have also selected the trust type as a simple trust. Why is TurboTax allocating some of the qualified dividends to the trust?

TurboTax Premier Online

Best answer by Anonymous_

I have been unable to reproduce the result you are seeing in my test copy of Form 1041.

Enter Forms Mode and check your Distributable Income for Schedule(s) K-1 (Dist Inc - K-1).

Also, ensure you make a distribution in that section even though this is a simple trust.

Anonymous_Answer

Employee

I have been unable to reproduce the result you are seeing in my test copy of Form 1041.

Enter Forms Mode and check your Distributable Income for Schedule(s) K-1 (Dist Inc - K-1).

Also, ensure you make a distribution in that section even though this is a simple trust.

D000DAuthor

I finally managed to get Turbotax to file as a simple trust by repeatedly going into the 1099-Div section. There I reported foreign tax paid for box 7. Box 8 was missing however. Later in the interview process I was asked what portion of the dividends was from a foreign country and if the dividends were from a RIC or Other Source. Initially I said RIC since that was indicated in the summary information for my 1099-DIV. I eventually discovered that I should have selected Other Source and then entered Various for the foreign countries (as shown on my 1099-DIV for box 8).

The section in Turbotax for entering 1099-DIV information is extremely confusing as written. Why not just provide the option of entering Various for box 8 when initially entering the 1099-DIV information?

Entering RIC seems to cause the simple trust to be automatically converted to a complex trust without any notification to the user. By going back, changing the trust back to a simple trust, and then changing RIC to Other when entering the 1099-DIV information I was able to get Turbotax to keep the trust as a simple trust.

The section for entering 1099-DIV when foreign taxes are involved needs work IMHO to make it clear to the user how to properly input the required information.

Anonymous_

Employee

@D000D wrote:
The section for entering 1099-DIV when foreign taxes are involved needs work IMHO to make it clear to the user how to properly input the required information.

Hopefully, that will happen at some point, but all of the 1099 variants need updating in the program. Users should not have to resort to Forms Mode for that purpose.

walkerfamily122

I had a similar problem. for a complex trust, for a distribution that equals all the dividend, int and net cap gains,

On form 1041, line 2b (1) it shows all the ordinary dividends allocated to beneficiaries but some of the qualified dividends going to beneficiaries and on 2b (2) the rest of the qualified dividends going to the trust.

I think I found a fix this by first going to forms Dist inc K-1 and learning the exact net amount of cap gains, then going back to step by step and inserting that figure shown on Dist inc K-1 as allocated capital gains distribution in the step-by step questionnaire and then toggling back and forth between step-by step and forms a few times, then suddenly it was corrected so all dividends , int, qualified and net capital gains were shown on the K-1's as allocated properly. Frustrating but ultimately correctable.