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Lev
Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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I live in Minnesota, have a cabin in Wisconsin. Want to leave

Resolved Question:

I live in Minnesota, have a cabin in Wisconsin. Want to leave to daughter. If we use an irravocable trust, how difficult is it to do the taxes? Same question if we do a life estate? Thank You Tom Leach
Submitted: 5 years ago.
Category: Tax
Expert:  Lev replied 5 years ago.

LEV :

Hi and welcome to Just Answer!


Irrevocable trust is a separate legal (and taxing ) entity - and has to file its own tax return. Here is the form to be used - www.irs.gov/pub/irs-pdf/f1041.pdf


For filing requirements - see instructions - http://www.irs.gov/pub/irs-pdf/i1041.pdf - for trusts - see page 4 - you must file the form 1041 if either the trust has any taxable income or gross income (not necessary taxable) $600 or more or a beneficiary is a non resident alien.


To evaluate complexity of preparing the income tax return for the trust - see page 35 where the IRS estimated required time – and possible overhead - just to prepare the form it might take in average a little more than 30 hours. Please be aware that not all tax preparers may do income tax returns for trusts.


Let me know if you need any help.

Customer:

Thank you, XXXXX XXXXX this over with my wife and the person who will be running the trust if we go that way.

LEV :

Take your time. Let me kno wif you need any calrification.

Customer:

The trust will have no income other than the money necessary to pay the bills, approx. $1500.00 a year

LEV :

According to you - the trust will not have TAXABLE income, but will have $1500 not taxable income - and tax return will be required.


Customer:

What about doing taxes for a life estate?

LEV :

"Life estate" is a form of ownership - it is not a legal entity - there is no special tax return "for life estate"

Lev and 2 other Tax Specialists are ready to help you