Income received from the trust or estate and deductions and credits is reported to beneficiaries on a K-1. An estate or trust that generates income of $600 or more and estates with nonresident alien beneficiaries must file a Form 1041. If beneficiaries receive the income established from a trust or estate, they must pay income tax on it. Read on to learn more about the K-1 form, including its definition and K-1 instructions. So, if you’re a beneficiary, you must pay tax on your share of income – and you can also claim credits and deductions on that income. An estate or trust required to file Form 1041 (United States Income Tax Return for Estates and Trusts) might pass certain items of income and deductions to its beneficiaries through IRS Schedule K-1.