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.
Our experts review the top fake IRS letter scams and phishing phone calls you may experience this tax season. Learn how to protect your valuable data with advice from our tax pros.
Received a notice that your business has inadequate records? Read the IRS definition and get more insight from the tax experts at H&R Block.
Read the IRS definition of an in-business trust fund express installment agreement (IBTF express) and get more insight from the tax experts at H&R Block.
Learn more about notice CP29, why you received it, and how to handle an IRS CP29 notice with help from the tax experts at H&R Block.