Question

Established a family trust

Forum|Forum|3 years ago
November 16, 2022
1 reply
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I am married filing jointly.

I established a Family Trust early this tax year. All my/our assets are now in the trust. If the trust receives interest; dividend and investment income from stocks, do I declare that as my income? If not and

If I am retired and not working, what do I show as my income, if I only receive Social Security income?

HollyP

Employee

It depends on the type of trust that you created.

Grantor trusts, where the grantor has control over the assets, generally require grantors to report all income from a trust on their own individual tax returns. Non-grantor trusts, on the other hand, work differently. Typically, the trust itself or its beneficiaries pay tax on taxable income.

Income kept in the trust is paid on a trust tax return using Form 1041. Income distributed to beneficiaries is reported to the beneficiaries by the trust using Form K-1 and then that form is used to prepare your individual tax return, Form 1040.

Here's some more info to review.

Navigating Family Trusts and Taxes

What is a Schedule K-1 Form 1041: Estates and Trusts?

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