Tax withholding from Form 1099 flows to line 24e of the Form 1041. If you want this amount to be distributed to the beneficiary's K1, follow the steps below:
An option must be set to indicate to the program that credits should flow to the beneficiary rather than remaining in the fiduciary.
To make the change for all clients:
- Locate and click on the Settings drop-down menu.
- Click on the selection labeled Options.
- Select the tab labeled Tax Return.
- Select the option labeled K-1 Distributions from the left navigation panel.
- Set the drop-down field labeled Credits to Prorate between Beneficiary/Fiduciary.
To make the change for a single client only:
- Navigate to Screen 9 - Schedule K-1 Distribution Options.
- Locate the field labeled Credits: 1=in fiduciary, 2=prorate to beneficiary [O], and input a 2.
- Lacerte will use the beneficiary allocation percentage to distribute to the beneficiaries.
- Navigate to Screen 43 - Schedule K-1 Overrides/Misc.
- Click on the section labeled Percentage Overrides located in the lower portion of the left navigation panel.
- Enter a percentage amount in the field labeled Tax credits (xxx.xxxx) (code 504).
- Make sure to include the correct percentage for each beneficiary.
- The figure will then show on line 13b of the K-1.
