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In anticipation of the upcoming Exempt Org and Texas Franchise deadlines (5/15), we've compiled a list of the most common questions here.
In anticipation of the upcoming Exempt Org and Texas Franchise deadlines (5/15), we've compiled a list of the most common questions here.
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- Can withholding flow through to a Form 1041 beneficiary on Schedule K-1?
Can withholding flow through to a Form 1041 beneficiary on Schedule K-1?
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BobKamman
Level 15
09-28-2021
11:40 PM
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Intuit just posted some "helpful" advice, for which they do not allow replies. It offers instructions for allocating withholding to trust/estate beneficiaries. Their workaround is to have it show up on Line 13B1, but that is for backup withholding – in other words, when the trust has to withhold on distributions because the beneficiary is subject to backup withholding.
The Form 1041 instructions themselves say, “Income tax withheld on wages
can't be distributed to the beneficiary.” They’re silent on annuity withholding, which is probably the most common place this problem shows up. I once tried to allocate that on Schedules K-1, but it generated an error notice from IRS. (This was several decades ago; I didn’t try it again.)
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