How to handle the trustee fee correctly？

Forum|Forum|5 years ago
September 4, 2020
2 replies
1 view

This is an irrevocable Trust and has its own TIN. I read that the Trust is not treated as a business, so there's no need to issue 1099-MISC to the trustee regarding the fee. Then, how is this fee reported to IRS (or not)?

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Best answer by Anonymous_

@easyxpress wrote:

....how is this fee reported to IRS (or not)?

Trustees who receive trustee fees from trusts must report the fees regardless of whether or not they receive tax reporting statements such as Form 1099-MISC.

Anonymous_Answer

Level 15

@easyxpress wrote:

....how is this fee reported to IRS (or not)?

Trustees who receive trustee fees from trusts must report the fees regardless of whether or not they receive tax reporting statements such as Form 1099-MISC.

easyxpressAuthor

Level 4

Sure. My question is actually concerning the Trust side (not the trustee). Is there a proper way for the Trust to report the trustee fee to IRS? So IRS can match the income for the trustee. Since 1099-MISC won't be used, reporting the trustee fee becomes a honest system?

Anonymous

Since it isn't a business the issuance of a 1099 isn't required though nothing prevents the trust from issuing one. it is the recipient who has responsibility for reporting the income even though no 1099 is issued.

Carl

Level 11

Just because a trust is not required to issue a tax reporting document, does not mean the trust is forbidden from doing so. Trusts issue 1099-MISCs all the time for expenses paid out of the trust - especially fees paid to the trust administrator.

Anonymous_

Level 15

I do not believe anyone in this thread stated that trusts are prohibited from issuing 1099-MISC forms.

The fact remains, however that trusts do not "issue 1099-MISCs all the time for expenses paid out of the trust" (I have no idea how that statement could be either verified or corroborated as the typical trust is private).

Regardless, it is clear that the IRS intended the form to be used only for trade or business reporting with extremely limited exceptions.

Trade or business reporting only.

Report on Form 1099-MISC only when payments are made in the course of your trade or business.