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Trusts & Estates Law/special needs trust filing of tax return


my father created a special needs trust for me b4 he died...there is no money but a small real estate that i rented for 1 year...from this trust..the property is held in my trust..
so i pay rent to it...other then a few dividends ..does the trustee , of my trust have to file tax return...only income is the rent..whats the cutoff/requirement of income to have to file ? how much income does the trust have to make b4 must file? we assume rental income is counted...were in California..
thank you,
we could not find this information ?

Taxation of Trusts can be one of two ways.

The trust could pass all the tax liability to another party or it could retain the tax liability and pay its own taxes. If it was passing the tax liability while your father was alive he included that income on his personal tax return. And now since he is passed it would fall to the beneficiary, you, to pay the taxes personally.

If it retained the tax liability then it would pay taxes on its own filing federally a 1041 tax return.

You would have to review the trust document to determine if there was a determination of how it would be taxed, also the SS-4 form that was filed to get a Tax ID (EIN) would have stated how the trust would be taxed.

Even if the trust loses money you would need to file a tax return for it. In addition to the IRS requiring the tax return to be filed it also memorializes those losses so that you can carry them forward into a year that you are profitable and offset some income.


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Richard Fritzler


Comparing the advantages and requirements of traditional estate practices, and unconventional methods? Are Trusts a viable asset protection vehicle? Is there an alternative to buying life insurance to reduce the impact of the estate tax. Is the elimination of the estate tax during the next decade good for everyone? I can review the benefits and misinformation that exists.


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