Is there a deadline for when a schedule K1 should be mailed out to me as a beneficiary of a trust account?
Unfortunately, the filing date for the trust is normally a calendar year so the trust return is not due until April 18, 2011. There is no special rule for getting the K-1s to the beneficiaries prior to that date. So, in short, the grantor has until April 18th to get the K-1 to you.
Customer: How will I be able to do my taxes if they don't give me the information before then? Do you know if I will have to pay taxes for the money received from a family trust account?
Stephanie B: Without complete information, you would have to file an extension and pay the assumed tax with that extension to avoid late payment penalties. I suggest giving everything else to your tax preparer, or in the software if you prepare your own return, so when you receive that K-1 all you have to do is enter it and you are done. As for paying taxes for money received from a family trust account, that depends on the individual trust and its earnings. There could be taxable income but it may not be the amount you received in cash as some of the funds could be corpus of the trust.
Customer: I have received about $3000 from a revocable living trust agreement after the settler died. Does that help know if I will need to pay more taxes on the money?
Stephanie B: Unfortunately, that doesn't help. Part of that could have been assets placed in and not all income. I suggest contacting the grantor or the accounting firm handling the trust and ask them for an ETA for the K-1. If you have not done so already.
Customer: As a beneficiary am I allowed to get that information from the accounting firm? The trustee is my step-sister and she will not talk to us.
Stephanie B: The accounting firm should be able to give that information to you since you are the beneficiary. In addition, if you are calling and requesting it, sometimes they speed up the process if they can.
Customer: Okay, I have my trust agreement with me. Do you know if the tax information (if I have to pay or not) would be in that somewhere?
Stephanie B: When you contact the accounting firm you can always start the conversation as "I was just confirming that you have my correct mailing address on my K-1 such and such trust. And do you have any idea when that was or will be mailed out to me?" Normally, if they say that all the interest income or dividend income or business income will flow to such and such beneficiary and corpus remains in the trust, then it may be all taxable. However, if any corpus (which is the assets put into the trust) is coming out, that will not be taxable. Plus, you may not know what type of income you received. If assets were sold, it could be capital, if it is interest income, it may be ordinary, if it is dividend income, it could be qualified. All of these items are taxed at different tax rates, so it is very difficult to determine taxable income without all the definites which would be on that K-1.
Customer: Well, thank you for the information. I guess I will need to contact her accountant tomorrow. I can't think of anything else to ask at this time. Have a great day.
Stephanie B: Thank you, ***** *****