Hi, I want to talk to you about two types of trusts: lead fill austere and I'm a lawyer, don't hold that against me, okay? The normal types of trust that you think of are irrevocable and revocable. Those are the two categories. But within each one of those categories, there's another type of trust called a simple trust or a complex trust. A simple trust is a trust that has to pay all of its income, its profit. Yeah, I mean the trust has assets in it. It might be bank accounts or whatever. They get interest, that's profit. In the simple trust, the trust has to pay all of this profit out of the trust so that it doesn't accumulate money. What we're really interested in is where's the tax. So in the simple trust, it passes all the money down to the beneficiaries, and then the beneficiaries have to pay the tax on it. The opposite is true in a complex trust. In a complex trust, the trust can actually accumulate money and build the accounts, and everything is within the trust. You like that because if it's an irrevocable trust, which is more likely to be complex than a revocable trust, usually revocable trusts are simple trusts. But if it's a complex trust, then it accumulates money and becomes its own taxing entity. If it's irrevocable, it has to have its own tax ID number. Now, it may be simple and then it has to pay everything out each year and file tax returns showing that everything is paid out. A trust's tax return is a 1041, you guys have a 1040. Your trust is a 1041. So if it pays everything out and still files a return, a revocable trust, or excuse me, an irrevocable trust files the...
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What happens if a simple trust does not distribute income Form: What You Should Know
May 23, 2024 — The trustee must also pay an amount to the Treasury, depending on what the trustees have not yet received in income (if any).” Trust Fund Distributions to the Trustee — IRS What happens with the trust income after distributions, how much is paid to the trustee, and how much will the trustee pay to the Treasury for the trust income? Trust Fund Distributions to Trustee — IRS May 31, 2024 — Trust income would be distributed. Tax-Free Amounts Payed to the Trustee | Trustee Paying There is a trust income that the trust cannot make payments to a trustee, however the trustee must pay taxes on that amount regardless of if it is tax-free or not. E. Trust Fund Income to Trustee — IRS When a trust is dissolved, the trust income has either passed through to the trustee (taxable now), or continues to pass through tax-free, and the amount paid to the trustee continues to be a tax-free amount. It is important to note that the tax-free portion only applies to trust income that pass through to the trustee, NOT to the other income in the trust. E. Trust Fund Income to Trustee of the Trustee-Independent Trust Fund — IRS May 31, 2024 — Payments due to a Trustee who receives distributions after May 31, 2025, are taxed, however, any payments made to another trustee who is in possession of the trust income after May 31, 2025, will be tax-free. What happens when the trustee receives distributions after September 21, 2024? Where distributions were made after May 31, 2025, the trust income was taxable even if it was distributed to another trust as tax-free. However, any distributions the trust made to a trustee after January 31, 2026, will be taxable, even if they pass through tax-free to another trustee. If a trustee is the beneficiary of an annuity contract, it will be taxable when the contract would have passed through to another trustee if it had been distributed in trust. See the FAQs for annuities. E. Trust Fund Income to Trustee of Trust Fund — IRS Where the trust income was made to a trustee, the amount received by the trustee will be taxable, unless the trust has already paid taxes for the income.
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