Instructions for Beneficiary Filing Form 1040

By Anna Assad
Trust beneficiaries have special obligations when filing Form 1040.

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A beneficiary, or recipient, of a trust still might be required to file a long individual tax return, Form 1040. Typically, if the trust is required to file a tax return, the trustee prepares it and files the necessary tax forms with the Internal Revenue Service (IRS) for each beneficiary. However, the beneficiary is liable for the accuracy of the forms the trustee files for his share of income from the trust. There are specific instructions provided by the IRS for trust recipients filing personal income tax returns.

Fill out Schedule K-1 (Form 1041) for your records only. Do not file this with your tax return. You will receive a completed Schedule K-1 from your trustee showing your portion of income and tax liabilities, but you also must fill out this form on your own in order to ensure the information on the trustee's form is correct. You are responsible for the accuracy of the amounts shown on the K-1 filed by the trustee.

File Form 8082, Notice of Inconsistent Treatment or Administrative Adjustment Request, if necessary. If you are treating trust income differently on your return than it was shown on the trust return, or if the trust failed to file a tax return when it was required, you must file this form. Attach an explanation of any inconsistencies between the amounts of your and the trustee's K-1 form to Form 8082. If the trustee failed to file a tax return, note this on Form 8082.

Check all sections of the trustee's K-1 against the one you completed. Boxes 1 through 14 on the K-1 show all of your portions of income, credits, losses and other financial matters from the trust. The trustee should have attached supporting documentation to the form for any amount with an attached asterisk.

Notify the trustee of any errors made on your K-1 Schedule. Request an amended or corrected K-1, and make sure the trustee files it with the IRS. Do not change anything on the K-1 you completed for your records. If the trustee will not correct the error or does not believe there is an inconsistency in the K-1 Schedules, you must file Form 8082.

Contact a tax professional if you are unsure about figures on the trustee's K-1. Failure to have the K-1 corrected or failing to file Form 8082 when you were required to do so can result in penalties for you. Additionally, you are responsible for any increased tax payments due once the error is fixed.

Deduct the allotted generation skipping transfer tax you paid on Schedule A of your 1040, if applicable. You can deduct the portions of this tax paid on income distributions if you received Form 706-GS(D-1), Notification of Distribution From a Generation-Skipping Trust, and you paid the generation skipping tax on Form 706-GS(D), Generation-Skipping Transfer Tax Return for Distributions. To determine this deduction, check the instructions for the 706-GS(D).

About the Author

Anna Assad began writing professionally in 1999 and has published several legal articles for various websites. She has an extensive real estate and criminal legal background. She also tutored in English for nearly eight years, attended Buffalo State College for paralegal studies and accounting, and minored in English literature, receiving a Bachelor of Arts.

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