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Last year we created an irrevocable trust and placed our two…

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Last year we created an...
Last year we created an irrevocable trust and placed our two houses in trust for the benefit of childdren and relatives. These houses earn income as they are rented out. We usually claim the rental income in our yearly tax return. The question is: How is the creation of this trust affect our income tax reporting. Should we proceed as though it is normal income like in past years since we are still alive and no asset distribution has been made? Should we file tax returns the usual way and claim the rental on these properties this year and in the future? I need a tax expert on this question. Thank ou.
Submitted: 2 years ago.Category: Tax
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1/27/2016
Tax Professional: Mark D, Enrolled Agent replied 2 years ago
Mark D
Mark D, Enrolled Agent
Category: Tax
Satisfied Customers: 1,342
Experience: MBA, EA, Specializing in Business and Individual Tax Returns and Issues
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Hello. An irrevocable trust files its own tax return, a Form 1041. It would report the rental activity on the tax return. Depending on whether the trust requires distributions of all income or not will depend on whether the trust pays the taxes on the profits, of if the beneficiaries do by receiving a K-1 from the trust. A trust return can be complex and I would suggest hiring a tax professional to assist in preparation.

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Tax Professional: Mark D, Enrolled Agent replied 2 years ago

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