Typically the way it works is the trust will pay tax on income reported in the name of the trust, but you can deduct distributions to trust beneficiaries from that income. So, if you distribute the income to the beneficiary, that income will be deducted by the trust and entered as taxable income on the personal tax return of the beneficiary.
Often, it is a good idea to pay the income to the beneficiary, as the beneficiary's personal tax rates are often lower than the trust tax rates.
In either case, the income only gets taxed once, either on the trust tax return or the beneficiary's tax return.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
