Lacerte 706 - how to prevent full marital deduction for non citizen surviving spouse

Forum|Forum|3 years ago
April 11, 2023
1 reply
8 views

In beneficiary information, if you check surviving spouse, but also check "no" for US citizenship, Schedule M still populates to provide the unlimited marital deduction. How to you prevent this?

Lacerte Tax

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Intuit_Kevin W

Employee

Hello @sfox,

For this particular scenario, you can go to Screen 34 - Beneficiary Allocations and put a -1 in the Ratio#1 (.xxx) or dollar amount field, then go back to the particular screens (10-18) and set the Beneficiary number or allocation ratio number to the ratio you entered on Screen 34. If this still does not give the desired result, feel free to give us a call at (800) 933-9999 and one of our experts would be able to further assist.

S

sfoxAuthor

Level 2

This does not work. If you use -1 for the surviving spouse allocation, it still populates Schedule M with distributions to the surviving spouse, but shows them as negative amounts. Schedule M should not be generated with the non-citizen spouse. The only way I have found to make things almost come out correctly not to allocate any assets to the spouse, so that the decedent's exemption is correctly applied to the estate. But the problem with this approach is that on page 2 of the return, there is then a blank for total assets distributed to the spouse, which is not correct. In my scenario, the surviving spouse receives over 95% of the assets (after two children each receive 1/3 of one particular asset), but there should be zero marital deduction (and no Schedule M) for the assets passing to the survivor (since there is no QDOT/ Qualified Domestic Trust).

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