Welcome Guest. Register Now!  



Reply
 
LinkBack Thread Tools Display Modes
  #1 (permalink)  
Old 03-18-2013, 01:31 PM
Junior Member
 
Join Date: Mar 2013
Posts: 3
Foreign Tax Credit Trust K1

I am working on a Trust's K-1 form and 1041. All income has been given to the trust's beneficiary and therefore need to allocate the income and credits for her taxes (K-1). We have US federal withholding and foreign tax withholding from Canada (Foreign tax credit). What additional forms need to be completed to give this credit to the beneficiary? Thanks for the help.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #2 (permalink)  
Old 03-18-2013, 07:40 PM
Moderator
 
Join Date: Oct 2010
Posts: 2,707
“We have US federal withholding and foreign tax withholding from Canada (Foreign tax credit). What additional forms need to be completed to give this credit to the beneficiary?”=====You need to attach Form 1116 if you elect to claim credit for income or profits taxes paid or accrued to a foreign country or a U.S. possession. The estate or trust may claim credit for that part of the foreign taxes not allocable to the beneficiaries (including charitable beneficiaries). Enter the estate's or trust's share of the credit on line 2a. Then your beneficiary will report it on 1040 line 47 or itemize it by reporting it on Sch A of 1040 line 8 as other taxes.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #3 (permalink)  
Old 03-18-2013, 07:57 PM
Junior Member
 
Join Date: Mar 2013
Posts: 3
Thanks - One additional Clarification

Thanks so much for the information. I want to make sure I understand.

If I want to give all the credits to the beneficiary and not claim any of the foreign tax credit for the trust would the trust need to complete a 1116 to add to the 1041 and K-1 or just the beneficiary file a 1116 since she will be receiving all the income and all the credits from the trust?

Thanks so much for clarifying it for me!



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #4 (permalink)  
Old 03-18-2013, 08:04 PM
Moderator
 
Join Date: Oct 2010
Posts: 2,707
"If I want to give all the credits to the beneficiary and not claim any of the foreign tax credit for the trust would the trust need to complete a 1116 to add to the 1041 and K-1 or just the beneficiary file a 1116 since she will be receiving all the income and all the credits from the trust? "===>Then, the beneficiary NEEDS to fiel form 1116 on her return.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #5 (permalink)  
Old 03-18-2013, 08:07 PM
Junior Member
 
Join Date: Mar 2013
Posts: 3
Thank you so much.

Thank you so very much for your help and your time. I understand and appreciate the help!



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #6 (permalink)  
Old 03-18-2013, 08:31 PM
Moderator
 
Join Date: Oct 2010
Posts: 2,707
There is no space for Form 1116 on Sch K1 of 1041;



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #7 (permalink)  
Old 03-18-2013, 08:33 PM
Moderator
 
Join Date: Oct 2010
Posts: 2,707
Trusts are entitled to a Foreign Tax Credit on 1116 on foreign taxes paid on income also taxed in the U.S. Regulation §1.642(a)(2)-1 permits an estate or trust to take a credit for taxes paid but “only for so much of those taxes as are not properly allocable under that section to the beneficiaries



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
Ads
Reply


Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Foreign Tax Credit Carryover acferrad Income 0 01-24-2011 07:33 PM
Foreign Tax Credit Carryover bdclark Tax Credit 3 11-22-2010 10:29 AM
Foreign Tax Credit babo1343 Miscellaneous 0 09-07-2010 12:50 AM
Can I take foreign tax credit or deduct taxes paid on foreign investments in IRA? jswift IRA/Sep 0 02-14-2010 01:03 AM
Trust principal distributed free from trust taxnewbie Trusts and Gift Tax Returns 0 03-12-2009 12:44 PM

Follow us on Facebook Follow us on Twitter Google Buzz Rss Feeds

» Categories
 
Individual
 » Income
 » IRA/Sep
 » Medical
 
Corporations
 » Payroll
 
Forum for CPAs
 
Financial Planning