Today TaxMama® hears from Grandma in the TaxQuips Forum, who tells us. “We have a rental, which was left to us in a trust. It only brings in $500.00 a mo which is $6,000 a year. It is very old and has quite a few repairs each year. We have always filed under the trusts name. We got to thinking, maybe we are not required to file, since it generates so little?
ALWAYS file a tax return, personally. As to the trust, I have no answer for you.
Take the trust documents to a tax professional who understands inheritances and trusts. The nature of the trust, the wording of the document, the will and other such things will determine what needs to be filed at the trust level. It will also determine things like depreciation, property tax deductions, legal fees etc., that might reduce the taxable income of the trust.
The trust should not be PAYING the taxes. The income should flow through to the heirs who are in a lower bracket, via a K-1, if the trust document allows for this.
A good tax pro can go back and amend the last three years and get you refunds if you’ve been doing it incorrectly. BUT only if they amend the oldest year before April 15th. Otherwise, you’ll only get 2 years of refunds. So RUN.
And remember, you can find answers to all kinds of questions about trusts and other tax and business issues, free. Where? Where else? At www.TaxMama.com.[Note: If you were subscribed to the e-mailed version of TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the join TaxMama.com link – it’s free!]
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