An estate or trust may pass certain items of income and deductions from the estate or trust through to its beneficiaries. If you’re a beneficiary, this means that you must pay income tax on your share of income.
The estate or trust will send you a Schedule K-1 showing the amounts you need to report on your tax return. The types of income that can be reported on the K-1 include investment income (such as interest, dividends, and capital gains) and passive income (such as rental income). Items that reduce your taxable income (such as deductions) or reduce your tax (credits) can also be reported.
How you report the income depends upon the type of income you’re reporting. Some entries are carried over to a particular form, but others may be carried to different places depending upon what they represent.
Use the Estates and Trusts (K-1) topic in the Investments section of the Interview to report your estate income. The line numbers on our Schedule K-1 follow those of the IRS form. Just copy the amounts from your K-1, and the H&R Block software will automatically carry them to the appropriate places.