741 Schedule K-1: Kentucky Beneficiary Share of Income, Deductions, Credits, ETC. (2025)
Kentucky · Kentucky DOR · Used for tax years 2025
Kentucky Schedule K-1 (Form 741) reports a beneficiary’s share of an estate or trust’s income, deductions, credits, and withholding. It shows federal and Kentucky amounts, differences between them, and a resident adjustment.
Who files this form
The form explains when a beneficiary must file a Kentucky individual income tax return. Full-year Kentucky residents use Charts A and B below. Nonresidents use Chart A only.
Chart A: Modified gross income
The listed income thresholds are:
- Family size of one: greater than $15,650.
- Family size of two: greater than $21,150.
- Family size of three: greater than $26,650.
- Family size of four or more: greater than $32,150.
Family size includes you, your spouse if married and living in the same household, and qualifying children under Internal Revenue Code Section 152(c). Modified gross income includes your federal adjusted gross income, your spouse’s federal adjusted gross income if living in the same household, tax-exempt interest from non-Kentucky municipal bonds, and any lump-sum distribution amount taxed on Form 4972-K.
Chart B: Kentucky adjusted gross income
The listed income thresholds are:
- Single, under age 65: greater than $3,270.
- Single, age 65 or over or blind: greater than $4,270.
- Single, age 65 or over and blind: greater than $5,270.
- Taxpayer and spouse, both under age 65: greater than $3,270.
- Taxpayer and spouse, one age 65 or over: greater than $4,270.
- Taxpayer and spouse, both age 65 or over: greater than $5,270.
Kentucky adjusted gross income is federal adjusted gross income plus the additions and subtractions from Schedule M.
Self-employment: You must file if your gross receipts from self-employment exceed the Chart A threshold for your family size, regardless of the Kentucky adjusted gross income amount used in Chart B.
Nonresidents and part-year residents: Based on the filing criteria, use Form 740-NP if you have Kentucky-source income as a nonresident, or receive income while a Kentucky resident. Part-year residents report income from all sources while residents and Kentucky-source income while nonresidents.
What you'll need
The schedule calls for:
- 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 allocable income, deduction and credit amounts, including federal amounts, differences and Kentucky amounts where shown.
For applicable entries, enclose:
- 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 should see 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 requested attachments: Enclose the computation for line 7, the schedule for line 8 and the computation for line 9(a), when those entries apply.
- Checking a beneficiary class for a trust: The beneficiary class checkboxes are marked for estates only.
Questions people ask
Which tax year should I report my K-1 items in?
Report them on your Kentucky return for the year in which the estate or trust’s tax year ends. The form’s example says that a calendar-year beneficiary whose estate or trust’s tax year ends January 31, 2025, reports those items on the 2025 return.
Where 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 all income shown on the K-1 taxable to a nonresident?
The schedule should reflect 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), report nonresident withholding on Form 740, line 31(a), or Form 740-NP, line 31(h). Report the pass-through entity tax credit on Form 740 or Form 740-NP, line 31(g).