741 Schedule K-1: Kentucky Beneficiary Share of Income, Deductions, Credits, ETC. (2024)
Kentucky · Kentucky DOR · Used for tax years 2024
Kentucky Schedule K-1 (Form 741) reports a beneficiary’s share of an estate or trust’s income, deductions, credits, and other tax items. It shows federal amounts, Kentucky amounts, and the differences used to determine Kentucky income adjustments.
Who files this form
The 2024 Schedule K-1 reports a beneficiary’s share of an estate or trust’s income, deductions and credits. Its beneficiary instructions explain when a Kentucky individual income tax return is required.
Full-year Kentucky residents: Use both Chart A and Chart B to determine whether you need to file.
Chart A: Modified gross income
- Family size of one: greater than $15,060.
- Family size of two: greater than $20,440.
- Family size of three: greater than $25,820.
- Family size of four or more: greater than $31,200.
Family size includes you, your spouse if married and living in the same household, and qualifying children. Modified gross income includes your federal adjusted gross income, your spouse’s federal adjusted gross income if living in the same household, non-Kentucky municipal bond tax-exempt interest, and any lump-sum distribution amount taxed on Form 4972-K.
Chart B: Kentucky adjusted gross income
- Single, under age 65: greater than $3,160.
- Single, age 65 or over or blind: greater than $4,160.
- Single, age 65 or over and blind: greater than $5,160.
- Taxpayer and spouse, both under age 65: greater than $3,160.
- Taxpayer and spouse, one age 65 or over: greater than $4,160.
- Taxpayer and spouse, both age 65 or over: greater than $5,160.
Kentucky adjusted gross income is federal adjusted gross income with the additions and subtractions from Schedule M.
Self-employment: You must file if your gross receipts from self-employment exceed the Chart A amount for your family size, regardless of the Kentucky adjusted gross income amount used in Chart B.
Nonresidents and part-year residents: Nonresidents use Chart A only. Nonresidents with Kentucky-source income and part-year residents with income received while a Kentucky resident or Kentucky-source income while a nonresident must file Form 740-NP based on the stated filing criteria.
What you'll need
Have the following information available to complete Schedule K-1:
- The estate or trust’s tax-year beginning and ending dates.
- The beneficiary’s identifying number, name, address and ZIP code.
- The estate or trust’s name and federal employer identification number.
- The fiduciary’s name, address and ZIP code.
- The beneficiary’s share of income, deductions and credits, including federal amounts, differences and Kentucky amounts.
- For estates only, the beneficiary’s class: A, B or C.
The form requires these attachments for the applicable entries:
- A computation for the federal estate tax deduction on line 7.
- A schedule for foreign taxes on line 8.
- A computation for excess deductions on termination on line 9(a).
For passive activity loss adjustments, Form 740 filers are directed to Form 8582-K and its instructions. Nonresident beneficiaries filing Form 740-NP must complete Form 8582-K and federal Schedule E with Kentucky amounts.
Common mistakes
- Combining beneficiaries on one schedule: The form specifies one beneficiary per K-1.
- Leaving out required attachments: The form says to enclose computations for line 7 and line 9(a), and a schedule for line 8.
Questions people ask
Which tax year should I report my Schedule K-1 amounts in?
Report the items on your Kentucky income tax return for the year in which the estate or trust’s tax year ends. The printed example says that a calendar-year beneficiary whose estate or trust’s tax year ends January 31, 2024, reports the items on the beneficiary’s calendar-year 2024 return.
How does a Kentucky resident report the line 11 adjustment?
If line 11, column (c), is positive, enter it as an addition on Form 740, Schedule M, line 2. If it is negative, enter it as a subtraction on Schedule M, line 11.
Is a nonresident taxed on every income item shown on Schedule K-1?
The schedule should show all income claimed as part of the income distribution deduction. However, nonresident beneficiaries are subject to tax only on income from Kentucky sources, activities or services in Kentucky, real or tangible property in Kentucky, or a partnership or S corporation doing business in Kentucky.
Where do I report the amounts on line 12?
Enter line 12(a) on line 7 of the Kentucky Limited Liability Entity Tax Credit Worksheet in the Form 740 or Form 740-NP instructions under Business Incentive Credits. For line 12(b), enter nonresident withholding on Form 740, line 31(a), or Form 740-NP, line 31(h). Enter the pass-through entity tax credit on Form 740 or Form 740-NP, line 31(g).
Can nonresidents and part-year residents receive the family size tax credit?
Yes. The instructions state that nonresidents and part-year residents are entitled to the family size tax credit.