Schedule K-1-T (IL-1041) is a form used by estates and trusts in Illinois to report the share of income, deductions, and other financial information allocated to each beneficiary. This form is attached to Form IL-1041, which is the Illinois Income Tax Return for Estates and Trusts. It provides a detailed breakdown of the beneficiary’s share of both nonbusiness and business income or loss, including capital gains, dividends, interest, and rental income. Additionally, it accounts for Illinois-specific additions and subtractions such as state tax exemptions, special depreciation, and contributions to job training projects. Schedule K-1-T also includes information about any pass-through withholding, pass-through entity tax credits, and federal income subject to surcharge. Beneficiaries receiving this form should attach it to their Illinois tax returns to accurately report their share of the estate or trust’s income and deductions. It is a key document in the taxation process for trusts, estates, and their beneficiaries in Illinois.
How To File Schedule K-1-T (IL-1041)
Filing Schedule K-1-T involves completing the form accurately and submitting it to the beneficiaries of an estate or trust. Each beneficiary must then attach a copy of the completed form to their Illinois state tax return. Schedule K-1-T is only filed once per tax year and should be kept for record-keeping purposes. Ensure that all relevant information from Form IL-1041 and any other related forms (such as federal Schedule K-1) is properly transferred to Schedule K-1-T. This guide provides detailed instructions on how to fill out each section of the form.
How To Complete Schedule K-1-T (IL-1041)
Step 1: Identify Your Trust or Estate
This section provides the basic details about the trust or estate that is distributing income to the beneficiaries.
- Line 1: Check the appropriate box (Trust or Estate)
Mark whether the form applies to a trust or an estate. - Line 2: Enter Your Name
Enter the name of the trust or estate exactly as it appears on Form IL-1041. - Line 3: Enter Your Federal Employer Identification Number (FEIN)
Provide the FEIN of the trust or estate. This is the number assigned by the IRS for tax reporting. - Line 4: Enter the Apportionment Factor
Enter the apportionment factor from Schedule NR, Step 6, Line 3 of Form IL-1041. If you do not have an apportionment factor, enter “1.”
Step 2: Identify Your Beneficiary
In this section, you will provide the information for the beneficiary who will receive income or deductions from the trust or estate.
- Line 5: Name
Enter the full name of the beneficiary receiving the income or deductions from the trust or estate. - Line 6: Mailing Address
Enter the beneficiary’s full mailing address, including street, city, state, and ZIP code. - Line 7: Social Security Number (SSN) or FEIN
Enter the Social Security Number or FEIN of the beneficiary. - Line 8a: Check the Appropriate Box for the Beneficiary’s Entity Type
Select whether the beneficiary is an individual, corporation, trust, partnership, S corporation, or estate. - Line 8b: Information for Grantor Trust or Disregarded Entity
If the beneficiary is a grantor trust or disregarded entity, complete this section with the necessary name and identification number (SSN or FEIN).
Step 3: Figure Your Beneficiary’s Share of Your Nonbusiness Income or Loss
This section breaks down the nonbusiness income and loss the beneficiary must report.
- Line 9: Interest
Enter the beneficiary’s share of interest income. - Line 10: Dividends
Enter the beneficiary’s share of dividend income. - Line 11: Rental Income
Enter the beneficiary’s share of rental income from property owned by the estate or trust. - Line 12: Patent Royalties
Enter the beneficiary’s share of income from patent royalties. - Line 13: Copyright Royalties
Enter the beneficiary’s share of income from copyright royalties. - Line 14: Other Royalty Income
Enter the beneficiary’s share of other royalty income. - Line 15: Capital Gain or Loss from Real Property
Enter the beneficiary’s share of capital gain or loss from real property. - Line 16: Capital Gain or Loss from Tangible Personal Property
Enter the beneficiary’s share of capital gain or loss from tangible personal property. - Line 17: Capital Gain or Loss from Intangible Personal Property
Enter the beneficiary’s share of capital gain or loss from intangible personal property. - Line 18: Other Income and Expense
Specify any other income or expenses that should be allocated to the beneficiary.
Step 4: Figure Your Beneficiary’s Share of Your Business Income or Loss
This section focuses on the beneficiary’s share of business-related income or loss.
- Line 19: Interest
Enter the beneficiary’s share of interest income from business operations. - Line 20: Dividends
Enter the beneficiary’s share of business dividends. - Line 21: Net Short-Term Capital Gain or Loss
Enter the beneficiary’s share of short-term capital gains or losses from business activities. - Line 22: Net Long-Term Capital Gain or Loss
Enter the beneficiary’s share of long-term capital gains or losses. - Line 23: Annuities, Royalties, and Other Nonpassive Income or Loss
Enter the beneficiary’s share of income or loss from annuities, royalties, and nonpassive sources before deductions. - Line 24: Directly Apportioned Deductions
Enter any directly apportioned deductions, including depreciation, depletion, and amortization. - Line 25: Total Nonpassive Income or Loss
Subtract Line 24 from Line 23 to get the total annuities, royalties, and nonpassive income or loss. - Line 26: Trade or Business, Rental Real Estate, and Other Rental Income or Loss
Enter the beneficiary’s share of trade or business, rental real estate, and other rental income before deductions. - Line 27: Directly Apportioned Deductions
Enter the directly apportioned deductions related to trade, business, rental real estate, and other rental activities. - Line 28: Total Trade or Business, Rental Real Estate, and Other Rental Income or Loss
Subtract Line 27 from Line 26 to calculate the net rental and business income or loss. - Line 29: Other Income and Expense
Specify any other income or expenses from business operations that should be allocated to the beneficiary.
Step 5: Figure Your Beneficiary’s Share of Your Illinois Additions and Subtractions
This section deals with specific Illinois tax adjustments that apply to the beneficiary.
- Lines 30-35: Additions
Report additions such as federally tax-exempt interest, Illinois taxes deducted, and related-party expenses. - Lines 36-45: Subtractions
Report subtractions including interest from U.S. Treasury obligations, retirement plan payments, and Illinois special depreciation.
Step 6: Figure Your Beneficiary’s Share of Illinois August 1, 1969, Appreciation Amounts
Here, you report any capital gains related to property acquired before August 1, 1969.
- Lines 46-48: Section 1245, 1250, and 1231 Gains
Enter the beneficiary’s share of gains from these property sections.
Step 7: Figure Your Beneficiary’s Share of Pass-Through Withholding and Tax Credits
This final section reports any pass-through withholding and related tax credits that apply to the beneficiary.
- Line 49: Pass-Through Withholding
Report any withholding made on behalf of nonresident beneficiaries. - Line 50: Pass-Through Entity Tax Credit
Report any tax credits received by the beneficiary from pass-through entities. - Lines 51-52: Federal Income Subject to Surcharge
Report any federal income subject to surcharge under specific Illinois regulations, such as those related to medical cannabis and gaming licensee income.