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Rakhi Vasavada
Rakhi Vasavada, Financial and Legal Consultant
Category: Finance
Satisfied Customers: 2607
Experience:  Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years
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I am a tad confused about this tax return I am working on.

Customer Question

I am a tad confused about this tax return I am working on. It is for a grantor trust. The trust was formed years ago in Florida. The federal is usually filed with the 1041 with all the information going on a grantor info statement for the grantor to claim. All the income is from K-1s that were received. The federal was easy enough. I'm just confused about the states. There were several state K-1s. The states were CT, DE, FL, GA, LA, MA, MN, NC, NJ, PA, RI, TN, VA, WV. I think I don't have to file for Florida because they don't have a state income tax. I also read on North Carolina's website that they do not require filings for grantor trusts because it is basically a waste of time. Can you help me out? Attached are the K-1s allocated by state.
Submitted: 10 months ago.
Category: Finance
Expert:  bkb1956 replied 10 months ago.

Welcome to Just Answer. My name is ***** ***** I will be happy to assist you.

In general, states tax trusts using many of the same principles that apply to individuals. For example, a “resident” trust is typically taxed on all of its undistributed income (i.e., income that is not reported by the beneficiaries); while a “nonresident” trust is only taxed on undistributed income sourced to a particular state. Most states use a combination of the following four “Trust Factors” to determine if a trust is a resident or nonresident:

  1. Grantor’s state of residence (either at death or when the trust becomes irrevocable);
  2. Location of the trustees;
  3. Location of the beneficiaries; and
  4. Location of the trust assets.

I would be happy to research the specific requirements for each state you mentioned, and have made a Premium Service Offer to perform the research. You can choose to accept or decline the Offer.

Best regards,

Barb