1041 tax form

[TrustUser]

hi, i thought this belonged more in the estate section, than the tax section ? i filed several 1041s years back. but it only was interest income for my mom.

now the trust is making taxable income for me and my 2 sisters, as my mom has passed away

q1) since i am renting out the house for the moment, the trust is making rent income. the form says to attach schedule F, 1040 ? i dont need to file a 1040 for the trust, do i ? was thinking that a 1040 was only for individuals ? does it simply want me to take a blank schedule F 1040, fill it in, and send it along with the 1041 trust return ?

q2) since i am distributing all the income equally, i assume that schedule B adjusted total income will be equal to distributable net income ?

q3) will i have 3 individual K-1 forms ? one each for me and my 2 sisters ?

q4) on the k-1 form that i had previously filed for my mom, it says that a statement must be attached, showing the beneficiary's share of income. what is the best way to tell the irs that each of us is sharing in it, 1/3 each ? in other words, how do most people fulfill this regulation ?

 

[cbg]

@Taxing Matters

 

[TrustUser]

hi cbg, are you paging TM for me ? thanks

 

[Taxing Matters]

q1) since i am renting out the house for the moment, the trust is making rent income. the form says to attach schedule F, 1040 ? i dont need to file a 1040 for the trust, do i ? was thinking that a 1040 was only for individuals ? does it simply want me to take a blank schedule F 1040, fill it in, and send it along with the 1041 trust return ?

If you look at the top of Schedule F, you'll see its a form that is filed with Forms 1040, 1040 SR, 1040 NR, 1041, and Form 1065. With a trust income tax return you'd attach Schedule F to the Form 1041 for the trust for the year.

q2) since i am distributing all the income equally, i assume that schedule B adjusted total income will be equal to distributable net income ?

The total trust income and the distributive net income (DNI) are different computations and they may or may not end up the same.

q3) will i have 3 individual K-1 forms ? one each for me and my 2 sisters ?

You file a Schedule K-1 for anyone who, at any time during the trust's tax year, was a beneficiary of the trust.

q4) on the k-1 form that i had previously filed for my mom, it says that a statement must be attached, showing the beneficiary's share of income. what is the best way to tell the irs that each of us is sharing in it, 1/3 each ? in other words, how do most people fulfill this regulation ?

On what line of the K-1 are you seeing this?

You might consider getting a tax pro familiar with Forms 1041 for estates. They are not the same thing as a 1040 for individuals and there are potential traps for the unwary in completing a Form 1041.

 

[TrustUser]

thanks tm,

in regards to your question, i think i misread it. i am looking at a 2015 k-1, that i filed for my mom. at the bottom of part 3, it says

Note. A statement must be attached showing the beneficiary's share of income and directly apportioned deductions from each business, rental real estate, and other rental activity.

it doesnt really mention anything about percentages

the top of the form says "beneficiary's share of income, deductions, credits, etc.

i think what the note is saying is that i just need to put in the actual dollar amounts for each person. other than rounding, each k-1 will have the same dollar amounts on them.

i need to download the k-1 form AS WELL AS THE INSTRUCTIONS.

i know on this form that i actually filed in 2015, that i did not attach anything else to the form, explaining the k-1 any further. of course it just had a minor amount of interest income. but it is still fairly low dollars. the only asset that produces income is the house.

 

[TrustUser]

hi tm, gosh i hope you realized that i meant schedule E !! i have rental income, not farm income - LOL

 

[LdiJ]

hi tm, gosh i hope you realized that i meant schedule E !! i have rental income, not farm income - LOL

I am going to echo TaxingMatters in that you really might want to consider getting a tax pro to help you with the 1041. It is not simple to do accurately and you could cause yourself (and your siblings) some grief if you get it wrong.

However, if you insist on doing it yourself, then you might want to consider getting a good software package to help you prepare the return. Good software could at least assist you in making sure that everything flows the way that it should. There might be online software available but I never use any of that so I am unfamiliar with whether or not any online systems are decent for 1041s.

 

[Taxing Matters]

hi tm, gosh i hope you realized that i meant schedule E !! i have rental income, not farm income - LOL

The schedule E is also attached to the Form 1041 and the K-1s you do for the Schedule E need to match up with the Schedule E. The 1041 is not a simple return for many trusts and does not function like the 1040. I'd suggest the help of a tax pro who does partnership returns to help you get it right.

If you are determined to do it yourself, there is computer software out there you can use. For example, Turbo Tax (Intuit) has a product called Turbo Tax Business that will help you with a Form 1041 for an estate but still need to have some working knowledge of how trusts work to really use it effectively. This program will not prepare 1040 individual returns. It's PC only (no Mac version) and will cost the estate about $165. There may be other tax publishers out there that offer a similar product. The trust can take a deduction for the cost on the form for year in which the program was purchased. These programs tend not to hold your hand as much as their 1040 products as they assume you have some basic trust accounting knowledge.

 

[PayrollHRGuy]

It's PC only (no Mac version) and will cost the estate about $165.

Intuit has a SaaS version For

Self-Employed

Personal & business income/expenses

Windows and Mac.

I think it does both.

 

[LdiJ]

Intuit has a SaaS version For

Self-Employed

Personal & business income/expenses

Windows and Mac.

I think it does both.

Someone who is self employed would not file a 1041 or anything even remotely similar to a 1041.

 

[Taxing Matters]

Intuit has a SaaS version For

Self-Employed

Personal & business income/expenses

Windows and Mac.

I think it does both.

It does not. The consumer personal and business package for self-employed persons does not do 1041 returns for estates or trusts. It does do a lot of the forms a self-employed person would need. But trust and estate returns are not business tax returns and are fundamentally different from business income tax returns. I've used Intuit products for many years and know pretty well what each package does. And as a Mac user I am quite well aware that the company does not make a Mac product for estate and trust returns because the market for it just isn't big enough. Most accountants and law firms use Windows machines because of specialized products they need that are only available on that platform. And since most run Windows, the Mac market for the 1041s turn out to be quite small. I wish it weren't so, I'd love to run more return prep software on my mac for the few times I actually prepare returns for clients during the year. But the volume of what I do for that just doesn't justify buying a PC set up (which I'd hate every minute I had to use it). In most instances therefore I refer clients to CPAs for the nitty gritty tax return prep work. It's less costly to the client, and less of a hassle for me.

 

[TrustUser]

thanks guys, i have a very simple set of income/expenses. so i am doing it myself. the fed form is done. california has not put out their 541 forms, as of yet. just wanted to remind you that i have already filed several of these in the past, when my mom was the sole beneficiary. if i had something complicated, i probably would hire someone. but this is a piece of cake, for the most part. my personal return is many times more complicated. but i am simplifying that, as well !!