trust taxation
I have a client with IRA issues but first I need to verify the taxation of her A-B trust.The client has done her own taxes for years and her husband died three years ago.The husbands portion(part b) has an EIN # but she just claims the income as her own on the 1040.I think she should have done a 706 and issued K-1’s for the last three years,am I missing something?Thanks Brian
Permalink Submitted by mk foss on Wed, 2009-02-04 22:06
She should be filing Form 1041 for the B Trust. She would issue herself a Schedule K-1 for the income and report that on her return. If the B Trust has expenses they are netted against the income, which can be an advantage taxwise.
Normally a B Trust pays tax on capital gains but you would need to check the trust agreement and/or state law on that point.
The most important thing is that the assets are titled in the name of the B Trust. So many surviving spouses fail to do that and it can cause problem at the death of the survivor.
Permalink Submitted by Bruce Steiner on Wed, 2009-02-04 22:24
And (unless it was too small) his estate also has to file an estate tax return (Form 706).