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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 11356
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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My mom's estate is on irrevocable trust it is $100,000. We

Customer Question

My mom's estate is on irrevocable trust it is $100,000. We are in wi I was informed we have to fill 1041 income tax form. What will our taxes be
Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.

Hi,

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That depends on what's paid at the trust level, and what's distributed to beneficiaries on the 1041's K-1.

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If the trusts terms allow for distributing everything, that's always best. Ecause trusts rates are very high... Trusts hit the 39.6% bracket at aroun 12000 of income ... Where an individual has to be at 400,000 or so to baht that kind of marginal tax rate.

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The trust can take distribution deduction on the 1041 and pass out the income to a beneficiary, so that the trust isn't taxed at all on the income

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Let me know what questions you may have from here

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One last thing; only items OF income are taxable (again to EITHER the trust of the beneficiary, never both) such as rent, interest, dividends, etc. ... Simply passing assets (principal) out to the beneficiaries is not a at able event.

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