Have a Tax Question? Ask a Tax Expert
You should receive a Form 1041 K-1 which would tell you how much, if any, of the $21,000. is subject to income taxes. It is possible that the bulk, if not all, of the $21,000. is from the trust's principal, verses the trust's income, ot that the trust has already paid any tax due on the distribution.
Did you receive any correspondence with the $21,000.?
Who administers the Trust? Is it a bank trust department or an individual? You may need to check with the Trustee unless there is some indication in a cover letter than came with the distribution as to what it represents.
Does your wife know the approximate financial worth of the individual(s) who started the trust? Her parents?
Just checking in to see if you have any follow-up questions?
If not, please remember to rate my response as that is the only way we receive credit for our work.
Thanks for using JustAnswer.com