IL1041,Trust was formed in IL, beneficiary lives out of state. Pro series populating form k-1-t(3) and has pass thru withholding on dividends interest to beneficiary.

[lizfidoruk]

Is this correct? I have three trusts similar. Two firms/cpa computed the pass thru withholdings on the dividends interest to out of state beneficiary. Now I have another firm that has not.  This firm has an expensive tax software and I;m wondering if pro series is wrong?  Or is there a box or what? Thank you so much! 

[sjrcpa]

Most of the time, beneficiaries are only subject to tax on income from intangible (interest, dividends & capital gains) in their state of residence. An exception would be if the income is business income.

I don't know ProSeries but there must be some input to prevent the withholding tax.

[IntuitMark304]

lizfidoruk,

You can allocate interest/dividends between business/nonbusiness income on the Business Income Worksheet.  Any amount classified as nonbusiness income would not be subject to withholding tax on the K-1-T(3).

[lizfidoruk]

Thank you for your response. That's what I thought but seeing two trusts from two different firms that had a similar situation and they had calculated the pass thru withholding plus the form populating in pro series had me questioning myself.  I appreciate you taking time to respond

[lizfidoruk · Accepted solution]

Thank you.  That does seem to be an option but after going back in I was able to clear out the Sch NR that was populated then completed the worksheet for the k-1-t and it seems to be reporting the right numbers now.  Appreciate your input