When one establishes a Revocable Trust to shield assets from probate, what ramifications, if any, are there for tax preparation? Does a tax return of any kind have to be filed for the trust? Would I still file a 1040? jo
A revocable trust is completely transparent for tax purposes. In other words it's treated as though it doesn't exist. You continue to file your 1040 and the trust files nothing, as long as it is revocable by you. Stu
The filing requirement for the 1041 are independent of the filing requirements for the 1040. Each stands on its own. Generally, the filing requirement depends on income. Remember to also check the state filing requirements for the individual and trust tax returns. Each state has its own rules.
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For tax purposes the trust does not exist as a separate entity while you are alive. File your normal 1040, including all income received through the trust. The trust DOES NOT file a separate return and does not need an EIN (uses your SSN).
It's still a 1040 with donor's SS# UNTIL the first grantor dies. specifically do not file a 1041. ed
The instructions for Form 1041 say that where a grantor trust is considered owned by one person, you are to file Form 1041 by filling in the top portion and attaching a statement to the form listing the name, address, and ID No. of the person to whom the income is taxed, and the income, deductions, and credits.
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