- 1). Complete Schedule K Part I: This is divided into three sections. In Section A, enter the federal tax ID of the trust or estate. In Section B, enter the name of the trust or estate. In Section C, enter the name and address of the person administering the estate.
- 2). Fill out the information in Part II. In Section F, enter the federal tax ID of the beneficiary, or person who has been paid out of the trust. This is extremely important and you can be fined for not providing this number unless you can offer a valid excuse on a signed affidavit attached to the form. You can use Form W-9 to request the beneficiary's identity number, although this should be done well in advance of tax time. The beneficiary's name and address go in Section G. If the beneficiary is a foreign national, check the box in H.
- 3). Complete Part III. This portion may change from year to year, and refers to lines in the 1041; therefore, it will be necessary to read the IRS instructions for the current tax year or ask a tax professional before filling it out. Basically, it includes interest, dividends, rental income, portions of short and long term capital gain, and any other distribution made to the beneficiary. If the beneficiary incurred any expenses directly related to one or other of these payments, these expenses can be deducted.