Video instructions and help with filling out and completing 1041 Instructions Schedule K 1

Instructions and Help about 1041 Instructions Schedule K 1

There are three different types of Schedule K ones we're going to deal with the form 1040 one schedule k-1 in this session we're not going to be addressing the other two types of schedule ones now the form 1041 reports the tax taxpayers share of income and other items from an estate or trust typically the one you will see most frequently is an estate we do not see a lot of K ones but you may run into them and and most likely it will be the estate which is the one we're going to talk about today on the intake interview there is a question that the taxpayer may mark but the k1 is kind of hidden in there typically you'll see that the taxpayer will have a copy of a k1 in his hand and that of course will be your signal to follow these procedures the k1 will have a year at the top it also has a beginning and an ending date if if the estate or trust is not on a calendar year basis you would use the ending date is the year that you should be dealing with if this says 2018 here that is okay to use this may say 2017 but if as a date in here this is your your date you can use notice it does say foreign 10:41 it does have a tax ID number for the estate the name of the estate who's handling the estate and then the beneficiaries should be your taxpayer or spouse and their name now the only fields that are in scope for us are interest income ordinary dividends qualified dividends net short-term capital gain net long-term capital gain up here 11 B is short-term loss carry over C is long-term loss carry over and you come down to 14 a which is tax exempt interest and 14 B which is foreign tax paid so those are the fields we can deal with if they're information in the other fields now you might want to check with the site coordinator to see if he wants to approve doing something with the return rather than sending the client elsewhere now because of some glitches in the program although there is a screen and in text layer to enter a 1041 and it has the appropriate fields there for you to enter it does not pass the information correctly to the Pennsylvania return so we going to go over ways to enter this information without using the k1 section of the federal return now if you're not creating a Pennsylvania return it's another state that you're creating it's okay to use the k1 section of the federal return if not again follow the procedures we're going to go over here if you have an amount in box one taxable interest you will actually enter it in taxable interest just like you would make any entry in taxable interest in the interest and dividends section of the federal return you add an interest in dividends and you add an interest income here's the payers name we suggest and again it will look just like an interest income entry box to a ordinary dividends same thing you go to interest in dividend this time you would add a dividend income and you key in the payers name and if you have an entry in box two you would add qualified dividends in that same form if you have tax exempt interest again you do the same thing you go to interest in dividends and this time you add a tax-exempt interest and you put in the payers name as follows now one quirk here if possible you need to learn is this taxable interest to Pennsylvania sometimes that can be a hard item to to determine if you can't then you should make it taxable to Pennsylvania so it's tax-exempt to federal but it's not tax exempt to Pennsylvania so you would add it just like you would Tactics any other tax-exempt interest that is taxable to Pennsylvania foreign tax a little bit different you go to deductions credit menu foreign tax credit form 1116 and you key in the amount for foreign tax if you have a net short term capital gain you go to capital gains and losses capital gains and losses items and you enter it just like you would if you had a capital gain if you were selling a mutual fund the same kind of entry and here's the information you would fill in and the same thing if it's a long-term capital gain you'd also go to capital gains and losses and add another one just like again if you were selling a mutual fund and in this time use would select various long-term box 11b short-term loss carryover you do the same thing you go to capital gains and losses this time you choose other capital gains data and you'd enter a short-term loss carryover amount and 11c is long-term loss carryover you do the same thing in the capital gains section other capital gains data and enter that amount so if you have informations on the k-1 you would split it out and make individual entries as we just described for each box and then they will pass to the fields in the PA return just as they would if you had entered those interest dividends type items they will pass to the PA return now one complication sometimes the taxpayer will have a Pennsylvania RK 1 or nrk1 instead of the federal K 1 then you don't make any entries in the federal return you simply make your entry in the Pennsylvania return and you go to income subject to tax estate or trust income and then you select a state or trust 1 you can actually enter two different ones if you happen to have two now this is a very easy entry if