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CO online Form 1041 (Schedule I): What You Should Know
Form 1041 ‡. You can only deduct capital gains if they were more than 200,000 (250,000 gross income) for the tax year in which the income was earned. For the remainder of this information article, assume a capital gain of 200,000, so capital gains of less than that amount do not qualify for the deduction. Any part of the gain that is distributed by a trust to anyone other than the beneficiary that is not the beneficiary's spouse is not taxed as ordinary income. For details regarding the rules for a trust or estate on which you are filing, see the IRS instructions on Forms 1046 or 1067. Filing Information for Schedule K If you are a beneficiary of an individual (generally, someone who has no other dependents other than you) and you file a federal estate tax return (Form 1041), the amount of income your beneficiary receives can affect the amount of Form 1041 that you have to file. In addition, there is no penalty if you do not file an accurate Form 1041. To assist you in filing an accurate Form 1041, here are some helpful information to help you. Do I need to file Form 1041 (a Schedule K-1)? No, you do not. However, if your beneficiary has other income, the beneficiary may be subject to federal estate tax as if the income were yours. If you have to file the Form 1041 to take advantage of the estate tax exemption for survivors, you will owe Social Security taxes when you file your return. If I change my beneficiary, do I need to file a new Form 1041? No. However, if the beneficiary changes (for example because the trust holder dies), the beneficiary's report on Form 1041 should be updated with the new beneficiary's information if the beneficiary's name or address changed. If there is a change in the beneficiary's name or address and there is another beneficiary named or described by the trust, the old beneficiary must apply for a new Form 1041, as well. Can my spouse file Schedule K-1? A trust created before 2023 (see Rev. Pro. 98-27) can file Form 1040, Form 1041, Schedule R, Schedule SE, or Schedule SEP. The trust can file Form 1040, Form 1041, Schedule SE, or Schedule SEP only on behalf of the deceased beneficiary.
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