My parents have a trust that was created many years ago and I am the trustee. Trust was not funded until recently. House was put in the name of the trust in August 2020 and I need to change my mother’s Fidelity Taxable account to the Trust’s TIN. I applied for the TIN from the IRS today which was very simple; and put December as the end of year for the accounting period.
The only part of the process that surprised me was in the IRS letter it stated:
1. Based on the information received from your or your representative, you must file the following forms by the date(s) shown: Form 1041 6/24/21
2. After our review of your information, we have determined that you have not filed tax return for the above-mentioned tax period(s) dating as far back as 2021.
3. Then it mentions I should file the return by 7/9/21.
My understanding is a 1041 tax return is not required unless the trust earns more than $600 worth; which it has not.
Thus, do I need to file a 1041?
Trust and 1041 Tax Return Question
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- Posts: 119
- Joined: Wed Apr 30, 2008 7:56 am
- Location: Massachusetts
Re: Trust and 1041 Tax Return Question
What type of trust is this, I.e., revocable trust, irrevocable trust, defective irrevocable trust, etc.? Why was the trust never funded until recently? Who is the beneficiary?
Gill
Gill
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Re: Trust and 1041 Tax Return Question
The threshold for trusts is $600 of gross income or any taxable income.
However, if it's a complete grantor trust (the lawyer who prepared it would have discussed this with your parents), it could use the social security number of one of them under Treas. Reg. § 1.671-4: https://www.law.cornell.edu/cfr/text/26/1.671-4: https://www.law.cornell.edu/cfr/text/26/1.671-4.
However, if it's a complete grantor trust (the lawyer who prepared it would have discussed this with your parents), it could use the social security number of one of them under Treas. Reg. § 1.671-4: https://www.law.cornell.edu/cfr/text/26/1.671-4: https://www.law.cornell.edu/cfr/text/26/1.671-4.
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- Posts: 119
- Joined: Wed Apr 30, 2008 7:56 am
- Location: Massachusetts
Re: Trust and 1041 Tax Return Question
1. It is an Irrevocable Trust my parent's created. They were the beneficiaries.
2. My mother is the only beneficiary as my father is deceased
3. We thought it was funded in 2003 (with the house being put under the name of the trust). Came to find out it was not done properly at the County so we got that straightened out with them August 2020
4. Last year we put my parents taxable Fidelity account in the name of the trust and I used the grantors SSN. It was my understanding we could use my mother's SSN but perhaps I was mistaken. We did report the taxes from that account on her 1040.
2. My mother is the only beneficiary as my father is deceased
3. We thought it was funded in 2003 (with the house being put under the name of the trust). Came to find out it was not done properly at the County so we got that straightened out with them August 2020
4. Last year we put my parents taxable Fidelity account in the name of the trust and I used the grantors SSN. It was my understanding we could use my mother's SSN but perhaps I was mistaken. We did report the taxes from that account on her 1040.