I have a few Trust questions. This is year 2 of a complex trust where no distributions are needed and taxes are being paid by the Trust currently as very low and under Trust tax rate.
There were originally 5 beneficiaries and 2 of them took all their funds out this year.
Let's say person 1 took $10k, person 2 took $2k, and the other 3 took nothing out.
There should be no taxes owed to the beneficiaries as the Trust is paying all taxes.
Q1. Turbotax asks about tier 1 and tier 2 distributions. Do I enter those amounts although Trust pays the taxes? If I do, it allocates income to those 2? Or do I enter no distributions? TT is not clear what to do.
I can't seem to make TT allow the Trust to pay any taxes due...
Q2. List of beneficiaries is calculating %... based on those distributions I entered as tier 2. Last year I entered the % each owned, there was no taxes due as Trust had a loss. Since person 1 and 2 no longer have any ownership, how do I reflect this?
Trust was meant to last in perpetuity at the discretion of the Trustee to allocate income and and principal and decide whom can have distributions.
If I put no tier 2 in, then it shows on the beneficiary list that person 5 has 100%, it automatically calculates these fields. Should this form show at year end % owned so person 3-5 each shows 33.33%? How to do this?
Can anyone help explain how to enter this correctly so there is no DNI? How to reflect owners at year end?
Thanks for all you do.
**I don't work for TT. Just trying to help. All the best.
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