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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 don't know what you mean when you say "make a distribution" in the program.

I entered the exact dollar value of each beneficiaries distribution. All of the money in the trust was NOT distributed. About half still remained in the trust (in a separate account with same tax ID). So I want some of the dividends to be allocated to beneficiaries and some to the trust (as these dividends were added to the principle which remained in the trust).

TurboTax does not seem to allow me to do this.

A

Anonymous_

Well, after numerous back and forth, a newbie like me became educated! I can't thank you enough for your help. I do strongly suggest asking TT to reword that question to avoid frustration by others. The issue is NOT splitting dividends between trust and beneficiaries, it is reporting ONLY taxable income as distributions.

I am sure those who have more knowledge of trust taxes likely figured this out (or just paid someone to do their taxes). For those of us who use TT we need all the help we can get.

So thank you!!!