How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask jgordosea Your Own Question

jgordosea
jgordosea, Enrolled Agent
Category: Tax
Satisfied Customers: 3039
Experience:  I've prepared all types of taxes since 1987.
3653323
Type Your Tax Question Here...
jgordosea is online now
A new question is answered every 9 seconds

What are the federal tax consequences of withdrawing monies

Resolved Question:

What are the federal tax consequences of withdrawing monies from a trust account? Ie $36,000 withdrawal to pay off a home?
Submitted: 4 years ago via Cornell Legal Info Institute.
Category: Tax
Expert:  jgordosea replied 4 years ago.

Greetings,

 

More information is needed to answer the question:

 

Is this a trust that your mother funded or was someone else the grantor of the trust?

 

About how much and what type of income will the trust have in the year of distribution?

 

Does the trust file an income tax return annually?

Does your mother get Schedule K-1 from the trust ?

 

Is she the only beneficiary of the trust? Does the trust agreement allow for the planned distribution to her?

 

Does she usually receive distributions from the trust? -

 

Thank you for the information.

 

 

 

 

Customer: replied 4 years ago.

it was set up by my grandmother as an inheritance.

 

I am not sure on the second question, someone else in the family is the executor.

 

she is the only beneficiary. and it does allow for a planned distribution for her. She currently receives a monthly stipend from it, and she is allowed to withdraw more if needed per the terms of the trust.

Expert:  jgordosea replied 4 years ago.

Greetings,

 

Although we do not have many details I can tell you the general rules.

There is no gift tax when a distribution is made to a beneficiary of a trust as you have described your nother's situation.

 

Your mother will have to include in income the amount up to 36K that represents income of the trust for the year of the distribution.

That is, if the trust had 40K of income in the year the 36K was distributed then your nother would incluide all 36K as income and it would be the same type and amount of income as the trust (interest, captial gains, dividends, etc.)

But if the trust had only say 20K of income from the trust in the year of hte distribution then only 20K of income would be included by your mother (and the rest would represent the body of the trust that had already had tax paid in a prior year).

 

So, the general answer is that your mother will include in her income as much of the 36K that is equal to the total income of trust for that year, but no more than the income of the trust.

You should find out from the executor and the tax practitioner of the trust how much income, and what type, she can expect to have to report so she can set aside the money to pay in when she files her taxes (or to make an estimated payment of her income taxes when she gets the distribution).

 

I hope this helps for you to know the general rule and that you now can ask the proper questions to help ensure she has enough paid in when she files for the year of distribution.

 

Please ask if you need clarification.

Best regards.

 

 

 

 

 

jgordosea, Enrolled Agent
Category: Tax
Satisfied Customers: 3039
Experience: I've prepared all types of taxes since 1987.
jgordosea and other Tax Specialists are ready to help you

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
< Last | Next >
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
  • I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight. Bonnie Chesnee, SC
  • Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation. John Minneapolis, MN
  • Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. Orville Hesperia, California
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
 
 
 

Meet The Experts:

 
 
 
  • Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
< Last | Next >
  • http://ww2.justanswer.com/uploads/KU/KUMI95/2013-9-30_195031_kumar.64x64.jpg Wallstreet Esq.'s Avatar

    Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
  • http://ww2.justanswer.com/uploads/CU/Cuttinggirl/2011-10-29_03719_wcrop2.64x64.jpg Wendy Reed's Avatar

    Wendy Reed

    Enrolled Agent

    Satisfied Customers:

    3052
    15+ years tax preparation and tax advice.
  • http://ww2.justanswer.com/uploads/CATax/2009-08-04_204548_Mark.jpg Mark D's Avatar

    Mark D

    Enrolled Agent

    Satisfied Customers:

    985
    MBA, EA, Specializing in Business and Individual Tax Returns and Issues
  • http://ww2.justanswer.com/uploads/IN/insearchoftheanswer/2013-8-16_0233_attorney.64x64.jpg Richard's Avatar

    Richard

    Tax Attorney

    Satisfied Customers:

    3229
    29 years of experience as a tax, real estate, and business attorney.
  • http://ww2.justanswer.com/uploads/MY/MyVirtualCPA/2012-7-5_44024_cookmegan1.64x64.jpg Megan C's Avatar

    Megan C

    Certified Public Accountant (CPA)

    Satisfied Customers:

    6121
    Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
  • http://ww2.justanswer.com/uploads/JG/jgordosea/2012-6-7_43138_GordosVeritas.64x64.jpg jgordosea's Avatar

    jgordosea

    Enrolled Agent

    Satisfied Customers:

    2783
    I've prepared all types of taxes since 1987.
  • http://ww2.justanswer.com/uploads/OZ/ozaukeecpa/2012-6-7_193219_Picture1croppedandshrunk.64x64.jpg MequonCPA's Avatar

    MequonCPA

    Certified Public Accountant (CPA)

    Satisfied Customers:

    2231
    CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.