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Jon Andrews
Jon Andrews, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 3118
Experience:  I deal with all levels of tax planning and controversy - from the ordinary to the complex.
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I have a question re a trust. Our father died last year.

Customer Question

I have a question re a trust.
Our father died last year. He had his investments in the trust.
We rec'd a 1099 from the insurance company with the breakdown of the distributions from the trust. There is a gross dist and a taxable dist (gains on investments)
The recipients ID is the ID of the trust not the beneficiary.The money was distributed to me from the trust after the investment accounts were closed. Do I file the 1099-R on my tax return or do we need to do a tax return for the trust itself?
Submitted: 6 years ago.
Category: Tax
Expert:  Jon Andrews replied 6 years ago.

The trust needs to file a return and report the appropriate information - including the amounts distributed to the beneficiaries. Each beneficiary will receive a K-1 showing what they need to report on their individual returns.

 

jon

Customer: replied 6 years ago.

Does the recipient also pay tax or is the tax paid by the Trust then?

What is the form that we file for the Trust Tax Return?

Expert:  Jon Andrews replied 6 years ago.

The trust should not pay any tax. It distributes the income to the beneficiaries and the beneficiaries pay any tax due.

 

File Form 1041.

 

jon

Customer: replied 6 years ago.

I put the 1099-R taxable amount on Line 8. (80k)

 

There was also Tax withheld on the 1099 in the amount of approx 20k. Does this go on the 1041? or the individuals return then? If it goes on the 1041 we have a refund due. That seems strange when you say that the trust does not pay taxes.

 

I put the income distribution of 120k on line 18 which would agree with the total distributtion which is greater than the amount taxable. Is this correct.

 

What dates should I use for the tax return. Can I use the calendar year?

 

thanks for all your help and sorry for all the questions.

 

Christine

Expert:  Jon Andrews replied 6 years ago.

Put the tax withheld on line 24b - that will allocate it to the beneficiaries along with the income.

 

jon

Expert:  Jon Andrews replied 6 years ago.

PS Yes you should use the calendar year.

 

jon

Customer: replied 6 years ago.
There was tax withheld from the distribution. I put that on line 24e. I see that you can allocate est tax payment to the beneficiaries. Can I do that with our tax withheld? If we net out the income with the distributions to us then the taxable amount is zero and we had about 20k withheld. We don't want a tax refund then have to go and pay it on out side after we get the K-1. Any advice about how to take care of this. Sorry lastquestion
Expert:  Jon Andrews replied 6 years ago.

You have it correct - the withheld tax gets allocated to the beneficiaries, the trust should pay no tax, and the beneficiaries will report both the income and the withheld tax.

 

jon

Customer: replied 6 years ago.
Jsut to confirm. DO taxes "withheld" go on the line 24b which says "estimated" taxes allocated to beneficiaries. That "estimated" has me worried. Thanks
Expert:  Jon Andrews replied 6 years ago.

Not to worry - that is where it goes.

 

jon