K-1 - Estates and Trusts in content page of articles
An estate or trust required to file Form 1041 might pass certain items of income and deductions to its beneficiaries. So, if you're a beneficiary, you must pay tax on your share of income. However, you can also claim credits and deductions on that income.
The estate or trust will send you a Schedule K-1 showing what you must report on your return. The K-1 can include:
Investment income, like interest, dividends, and capital gains
Passive income, like rental income
Deductions to reduce your taxable income
Credits to reduce your tax
How you report the income depends upon the type of income you're reporting.