He passed away July 2019.
The irrevocable trust has a TIN number. Under Income tax returns, it states that "this irrevocable trust is a "grantor trust" under the IRC. Any income generated by the Trust assets will need to be reported on your (settlor) tax return."
The trust only held CD's/cash and made no distributions to beneficiaries while he was alive. The total interest from accounts is about 6K.
After his death, a cash donation was made to his church (per his request) and a disbursement was made to a needy beneficiary.
I purchased the H&R Block Small Business Owners software to file the 1041 but its been confusing and has poor reviews- ugh.
I will file his last 1040 as well.
I thought it would be fairly simple to fill it out since the trust didn't have any complex accounts but it hasn't been so any help is much appreciated!
H&R Block asks if this return is for a Grantor Trust. If I check NO- I enter the name of the trust and fiduciary name/title/address. If I enter YES- enter the my dad's name/address/allocation %.
EIN and Date- it asks for the date the trust was created OR date of death if for a decedent's estate. My dad passed away 7/19. Is this return a decedent's estate vs a trust return?
Entity Type of trust- Decedent's Estate (vs simple/complex). It also has a box to indicate if its also a Grantor type trust.
Return Type- Initial? ( did not have to file for 2018)
Distributable Net Income for Schedule K-1. I gave a cash disbursement of 9K to a beneficiary. H&R says to fill out form but gives no guidance. Where do I claim the 9K? If under Allocation of Distributions, where? It was taken from the trust's savings account.
For 2018- the trust had less than $600 income and a 1041 was not filed.
Taxslayer site seems to explain the 1041 form better- I will read it over this week.
I started doing trust 1041s with TurboTax - Business after having 1041s prepared by a CPA for a couple of years, so I knew what the resulting return should look like. I once tried to use the cheaper HRB Premium & Business software, but I found it to be very opaque / far less “guided” than TT-B, so I went back to TT-B. But I don’t know if TT-B would solve all your issues.
Since this is a one-off(?) return for you, maybe just go to a CPA/enrolled agent to get the 1041 done…
I tried to use H&R Block's version (that covers estates/trusts) one year and it was too confusing...though I use Deluxe & State for personal returns.
This is a irrevocable intentionally defective grantor trust.
I tried taxact for trusts and it much better than h&r's. But per taxact- i could not choose decedents estate and grantor type=it says combination of entity types is invalid. why is that? I can choose simple/grantor or complex/grantor but not decedents estate/grantor.
Trust doesn't specify if its a simple or complex so i'm choosing complex since i didn't follow the simple trust distribution requirements.
Since the distribution is larger than the interest earned, the trust does not owe any taxes per taxact.
I will try the awful H&R block trust again knowing what goes where and hopefully come out ok. Otherwise I will buy the taxact or turbotax programs.
The trust is not an estate.
You will need to read the trust agreement to see what it says the trustee is supposed to do once the grantor dies. If the trust requires all the income to be distributed then that would be a simple trust. If the trust is not required then it would be complex.
If you are also doing the estate income tax return, keep in mind that bequests of a specific sum of money don't pass out income to the beneficiary, usually.
I honestly would recommend hiring CPA who deals with trust and estates to help.