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I inherited a relatively small amount of money from a trust after my grandmother passed away in 2012. The amount was well under the threshold of paying any estate taxes at either the federal or state level, so did not change my taxes due. However, the estate executor did not file the Schedule K-1 (Form 1041) until well after the tax filing deadline for 2012.

The form has the following information:

  • (Field E) marked as "final form 1041 for the estate or trust"
  • (Field H) marked as "Domestic beneficiary"
  • (Fields 1-14, except field 5) -empty-
  • (Field 5: Other portfolio and nonbusiness income): -the amount of my inheritance-

Now that I've received the K-1, do I need to refile/amend my tax return with the IRS, even though my taxes due will not have changed (since the estate was under the $3.5million threshold for 2012)?

Is it possible this was not the correct form for the executor to have used to report the inheritance?

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  • What's in the K-1 that doesn't impact your tax bill? Can you share a bit more detail?
    – JTP - Apologise to Monica ♦
    Sep 22, 2013 at 21:58
  • @JoeTaxpayer, I've updated the posting with more details.
    – John M. Wright
    Sep 22, 2013 at 23:51

2 Answers 2

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Sounds like your grandmother's estate had taxable income and the estate did not pay the estate "INCOME" tax. Rather the estate shifted the burden to pay that tax on the beneficiaries which is why you received a K1. If that K1 reports income received by you, then YES you would have to amend your tax return. I am in exactly that same situation now. After the October 15 deadline to file 2012 tax returns, I received a K1 for income received from my dad's estate. I now have to file a late amended 2012 income tax return and pay income tax on what I inherited. My dad had a small estate, but the money that made up that small estate all came from an IRA he had. He designated the estate as his beneficiary. So when the stocks in the IRA were sold, that all became taxable income to the beneficiaries of the estate.

Anything involving taxes is confusing at best. But do not confuse estate income tax, with estate tax -- they are two different taxes.

Hope this helps.

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    As I review the K-1, unfortunately, Carol, it looks like you are correct. Or at least you might be. Distribution of corpus (principal) doesn't appear on the K-1, but only items that have tax due. (To my knowledge) If the trust had untaxed gains, and didn't pay that tax, but distributed the income, the beneficiary can have a tax due.
    – JTP - Apologise to Monica ♦
    Nov 8, 2013 at 19:09
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Since there's no taxable income (inheritance is not taxed to you), you do not need to amend. The executor used the correct form.

Note, I'm not a tax adviser or a licensed professional. For a tax advice advice contact a CPA/EA licensed in your state.

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