Drake Tax - 1041: 1099 Income with Backup Withholding

Article #: 10346

Last Updated: October 18, 2024

 


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How to enter estate or trust backup withholding that appears on a 1099 received by the estate or trust

Use screen WKK1, line 13b to allocate backup withholding. The credit then flows according to the beneficiary percentages (subject to modification on screen K1, line 13, using code B Credit for backup withholding).

To retain backup withholding instead of allocating it, enter it on either:

  • screen 4, Schedule G, Part 2, line 14 "Federal income tax withheld" and check the box "Mark if any is from Form 1099," if applicable.

  • screen INT or DIV, line 4 (federal tax withheld).

Important  Do not enter the same backup withholding as both allocated and retained.

The 1099 screen is available in the 1041 return type on the Income tab. Regular Federal, state, and local taxes withheld on Form 1099-R can be entered there, but not backup withholding.

Note   Allocating ordinary withholding to a beneficiary as if it were backup withholding will cause problems with the beneficiary's individual return. The beneficiary is likely to receive an IRS notice about it.

For more information, see the Form 1041 Instructions.