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Posted by jo on November 7, 2007, 2:46 am
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>>>> When one establishes a Revocable Trust to shield assets from
>>>> probate, what ramifications, if any, are there for tax
>>>> preparation? Does a tax return of any kind have to be filed
>>>> for the trust? Would I still file a 1040?
>>> The filing requirement for the 1041 are independent of the
>>> filing requirements for the 1040.
>>> Each stands on its own.
>>> Generally, the filing requirement depends on income.
>>> Remember to also check the state filing requirements for the
>>> individual and trust tax returns.
>>> Each state has its own rules.
>> This answer is incorrect for revocable trusts (Living
>> Trust). Such a trust is an ignored entity for income tax.
> I wouldn't call it incorrect. He says the filing
> requirement depends on income. In the case of a grantor
> trust, the trustor is taxable on all trust income, so the
> trust itself as no taxable income. As a result, there is no
> need to file a return for the revocable trust.
I'm confused. Most are saying no need to file a return for
the revocable trust (which is equivalent to a grantor
trust), and in fact, one should not. I still don't
understand what Ben's statement about "the filing
requirement depends on income". Is there a situation where
these trusts do have to file a return? Remember, I only
know enough to be dangerous :}
jo
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