File a 1041??

[bdjjmj1]

I am mom to two special needs children, last June their grandmother established special needs/supplemental needs trust for each of them. They are irrevocable, complex, qualified disability trusts and she retains no control or intrest in them(so not grantor trusts). They were established in a simple cash savings account at a local bank and each had $1000 of her cash deposited at opening, no more deposits were made, and each got less then $10 interest. These trusts for now, are basically placeholders for the future when our and their grandparents estates will place money into them.

Its my understanding you only need to file a 1041 for trust income over $600, so my question, is that initial deposit of $1000 considered income and therefore require filing??

Thank you!

[Vanessa A]

No, the initial deposit is not income.  Any interest earned on the deposit would be income. Since the interest would be less than $600 on $1,000, there would be no need to file a 1041.

[tagteam]

A trust is required to file an income tax return (Form 1041) if it has any taxable income for the tax year or gross income of $600 or more (regardless of taxable income).

See https://www.irs.gov/instructions/i1041#en_US_2021_publink1000285943