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PDtax
PDtax, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 4444
Experience:  35 years tax experience, including four years at a Big 4 firm.
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Hello, My question: I am reading that dependents are required

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Hello,
My question: I am reading that dependents are required to file a return if unearned income is > $950, and this includes "distributions of unearned income from a trust". (Pub 501)
I have a trust beneficiary that received a distribution from a complex trust a small portion of which (about $800) was interest income reported on the trust K-1. How do I report the rest of the distribution on this beneficiary's return? Or do I not report it? I assume she has to file? Thanks! Kelben

PDtax :

Welcome to the site. I will be helping you today.

PDtax :

It sounds like your dependent child does not have to file the tax return or 2012. You are correct that the test is unearned income greater than $950. The K-1 showed less than that, so no tax return will be required as long as that is the only income item for 2012 for the dependent.

PDtax :

The rest of the distribution is tax free and will not impact the $950 income threshold. It happens often with complex trusts; that distributions can exceed the taxable portion. The excess does not trigger the filing requirement, nor is it taxable to the recipient (the K-1 says so).

PDtax :

Thanks for asking at Just Answer/Pearl.

Customer:

Great thank you. Confirmed what I thought.

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