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To enter the amount of backup withholding to be distributed to the beneficiaries:

  1. From within your TaxAct 1041 return (Online or Desktop), click Federal. On smaller devices, click in the upper left-hand corner, then click Federal.
  2. Click Basic Information in the Federal Quick Q&A Topics menu to expand, then click Withholding Allocated to Beneficiaries.
  3. Continue with the interview process to enter all of the appropriate information.

Per IRS Instructions for Form 1041 and Schedules A, B, G, J, and K-1 U.S. Income Tax Return for Estates and Trusts, on page 34:

Line 14—Federal Income Tax Withheld

Use line 14 to claim a credit for any federal income tax withheld (and not repaid) by: (a) an employer on wages and salaries of a decedent received by the decedent's estate; (b) a payer of certain gambling winnings (for example, state lottery winnings); or (c) a payer of distributions from pensions, annuities, retirement or profit-sharing plans, IRAs, insurance contracts, etc., received by a decedent's estate or trust. Attach a copy of Form W-2, Form W-2G, or Form 1099-R to the front of the return.

CAUTION! Except for backup withholding (as explained below), withheld income tax can't be passed through to beneficiaries on either Schedule K-1 or Form 1041-T.

Backup withholding. If the estate or trust received a 2023 Form 1099 showing federal income tax withheld (that is, backup withholding) on interest income, dividends, or other income, check the box and include the amount withheld on income retained by the estate or trust in the total for line 14.

Note that any link in the information above is updated each year automatically and will take you to the most recent version of the document at the time it is accessed.

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