Does the irs require withholding of income from trust?

[rmfrog1]

The trust pays annual income to beneficiaries. Much like an employer withholds money to pay income taxes on money an employee earns, does the IRS require a trust to do similar withholding of income to pay part of the income taxes that beneficiaries would owe?

[tagteam · Accepted solution]

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@rmfrog1 wrote:
....does the IRS require a trust to do similar withholding of income to pay part of the income taxes that beneficiaries would owe?

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The IRS does not, provided the trust distributes all of its income and gain to the beneficiaries.

Note that some states require pass-through withholding for nonresident beneficiaries.

[tagteam]

Further note, that when trusts distribute income/gain to beneficiaries, they must ensure that they have sufficient withholding and/or have paid estimated tax on the income/gain distributed to them.