tax question
Good Morning.
Quick question for the forum.
My client has an IRA Trust beneficiary of the client.
The client is deceased.
The beneficiary of the trust is her niece. Who pays the taxes on the distributions from the TRUST?
Is it the beneficiary or does the trust pay the taxes?
Please advise. Thank you, Hillary Wertlieb
Permalink Submitted by Alan - IRA critic on Thu, 2025-05-29 10:59
It depends on the terms of the trust. If the trust annually passes through trust income from IRA distributions to the niece, the niece will receive a K 1 and report the income on their personal return. In this situation the trustee of the trust should decline all tax withholding for the trust. However, if the trust accumulates income in the trust, the trust will report the income which will be subject to the higher marginal tax rates of a trust and would have the appropriate amount of tax withholding.