How do I report accrued interest on an Estates & Trusts return?
While preparing a TurboTax Estates & Trusts tax return (Form 1041) you are unable to report accrued interest paid (or less commonly, received) in either the interview or Forms mode. As a result, you are unable to offset interest you already entered.
Explanation and Workaround
On individual (Form 1040) tax returns, accrued interest is reported on Schedule B. However, because there is no equivalent schedule for estates and trusts (Form 1041) tax returns, TurboTax Business doesn't present a specific area where you can enter accrued interest.
To report accrued interest in TurboTax, you'll need to create a separate interest entry. Here's how:
- Click the Federal Taxes tab.
- On the Your Income summary screen, click Edit next to the first item, Interest income.
- On the Interest Income Summary screen, click the Add Another Interest Income Item button.
- You should now be at the Interest Income screen.
- In the Payer Name field, type Accrued Bond Interest or a similar description.
- In the Total Interest Income field, enter accrued interest paid as a negative number. (In the rare case of accrued interest received, enter it as a regular, positive number.)
- Select the appropriate Type and then click Continue.
The interest income, adjusted for the accrued interest, will appear on Form 1041, Line 1.