Trust Income Tax

[wap2412]

I need to know if Lacerte is handling Trust state income tax refunds correctly. I have a client that is being taxed on over $30,000 of state tax refund even though they only were able to deduct $10,000 of state income tax in the prior year on the form 1041.

[sjrcpa]

No they are not handling it correctly. Don't you have a Diagnostic saying they are not applying the tax benefit rule?

[wap2412]

Thanks 

I will check that in the morning 

[wap2412]

I do not have that diagnostic.

William

[sjrcpa]

You'll need to apply the tax benefit rule and manually calculate the taxable refund amount, if any.