Updated September 29, 2026. Quick answer: Boxes 1 through 5 of a Schedule K-1 (Form 1041) show your share of the estate’s or trust’s interest, dividends, capital gains and other portfolio income. Each box carries onto a named line of your Form 1040 or one of its schedules. The table lists the line for every box.
Where each income box goes
The instructions read here are the 2025 edition of the IRS Instructions for Schedule K-1 (Form 1041) for a Beneficiary Filing Form 1040 or 1040-SR (Catalog Number 11374Z, dated March 13, 2025), the edition served at the IRS standing PDF address when read on September 29, 2026. They are written for the beneficiary; the fiduciary’s own instructions are in the Instructions for Form 1041. Page 2 of the form itself gives the summary of where each amount is reported: “This list identifies the codes used on Schedule K-1 for beneficiaries and provides summarized reporting information for beneficiaries who file Form 1040 or 1040-SR.”
| Code | Form label | Report on (form’s code list) |
|---|---|---|
| 1 | Interest income | Form 1040 or 1040-SR, line 2b |
| 2a | Ordinary dividends | Form 1040 or 1040-SR, line 3b |
| 2b | Qualified dividends | Form 1040 or 1040-SR, line 3a |
| 3 | Net short-term capital gain | Schedule D, line 5 |
| 4a | Net long-term capital gain | Schedule D, line 12 |
| 4b | 28% rate gain | 28% Rate Gain Worksheet, line 4 (Schedule D instructions) |
| 4c | Unrecaptured section 1250 gain | Unrecaptured Section 1250 Gain Worksheet, line 11 (Schedule D instructions) |
| 5 | Other portfolio and nonbusiness income | Schedule E, line 33, column (f) |
Box 1, interest income
“This box reports the beneficiary’s share of the taxable interest income.” “This amount is reported on line 2b of Form 1040 or 1040-SR and Schedule B (Form 1040), Part I, line 1, if applicable.”
Boxes 2a and 2b, dividends
Box 2a: “This box reports the beneficiary’s share of ordinary dividends.” “This amount is reported on line 3b of Form 1040 or 1040-SR and Schedule B (Form 1040), Part II, line 5, if applicable.” Box 2b: “This box reports the beneficiary’s share of qualified dividends.” “This amount is reported on line 3a of Form 1040 or 1040-SR.”
Boxes 3, 4a, 4b and 4c, capital gains
“Net short-term capital gains are reported on line 5 of Schedule D (Form 1040) and net long-term capital gains are reported on line 12 of Schedule D (Form 1040).” For boxes 4b and 4c the instructions send the amounts to two worksheets in the Schedule D instructions: “A 28% rate gain is reported on line 4 of the 28% Rate Gain Worksheet” and “An unrecaptured section 1250 gain is reported on line 11 of the Unrecaptured Section 1250 Gain Worksheet”. The instructions add a note about a disposition of a passive activity: “If there is an attachment to this Schedule K-1 reporting a disposition of a passive activity, see the Instructions for Form 8582, Passive Activity Loss Limitations, for information on the treatment of a disposition of an interest in a passive activity.”
Box 5, other portfolio and nonbusiness income
“The amount reported in this box is your distributive share of royalties, annuities, and other income that isn’t subject to the passive activity rules.” “It also includes income in respect of a decedent (IRD), which isn’t included in box 1, 2a, 3, 4a, 6, 7, or 8.” The estate tax deduction that can go with IRD is on the Box 10 page.
A K-1 is a share of income, not of the estate
A K-1 reports the income the estate or trust earned and passed to you. It does not report the value of what you inherited. CMG’s Schedule K-1 for estates page explains that distinction.
Common mistakes
- Reading Box 1 through Box 5 as the amount you inherited. They are your share of income the estate or trust earned.
- Entering a capital gain from Box 3 or 4a on the wrong Schedule D line. The instructions name line 5 for short-term and line 12 for long-term.
- Missing that Box 5 can hold income in respect of a decedent, which is not counted in the other income boxes.
Related: Schedule K-1 (Form 1041) Boxes 6 to 9: Business and Rental, Schedule K-1 Box 14 Code F and Code ZZ: Other Information, what a K-1 from an estate reports, and the estate’s Form 1041.
Every box and code in one place: the Schedule K-1 (Form 1041) boxes table. What a K-1 from an estate reports overall is on the Schedule K-1 for estates page.
Sources
- IRS, Instructions for Schedule K-1 (Form 1041) for a Beneficiary Filing Form 1040 or 1040-SR (2025): https://www.irs.gov/pub/irs-pdf/i1041sk1.pdf
- IRS, Schedule K-1 (Form 1041) 2025, Beneficiary’s Share of Income, Deductions, Credits, etc., page 2 code list: https://www.irs.gov/pub/irs-pdf/f1041sk1.pdf
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How our partner relationships workSource: the IRS instructions for the beneficiary who receives Schedule K-1 (Form 1041), and the form’s own code list, read at irs.gov on September 29, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the estate’s or trust’s fiduciary or the IRS is the right place to confirm anything consequential.