Taxes for a trust

Forum|Forum|3 years ago
January 15, 2023
5 replies
48 views

My father died this year and I am the trustee for his estate. I have siblings so that there are 5 beneficiaries.

Part of my father's holdings were in a traditional IRA that was passed through to his living trust. We beneficiaries agreed to distribute the value of the account over 3 years.

The trust was issued a 1099R for the 2022 RMD but we assumed the taxes would be paid by the beneficiaries. How is this income reported? I was advised the taxes would be passed through but there is no supporting 1099R for we individuals.

Or will this be reported on a K-1 schedule from the trust and affect 2023 taxes for the beneficiaries?

Critter-3

Level 15

Or will this be reported on a K-1 schedule from the trust and affect 2023 taxes for the beneficiaries? Bingo except if the estate took a 2022 distribution then it goes on a 2022 estate return form 1041 and passed thru to the beneficiaries on a 2022 K-1 form to go on their 2022 tax return.

dmertz

Level 15

If the trust uses a calendar year, the income passed through to beneficiaries would be 2022 income to the beneficiaries. If this income is instead included a trust income tax return for a fiscal year ending in 2023 , it would be 2023 income to the beneficiaries. The end date of the trust's tax year is established with the filing of the first trust income tax return.

Tax4KrauseAuthor

Level 2

Thank you for the information. I have completed the 1041 work for tax year 2022.

I have not filed the return yet as I'm confused that Turbotax shows taxes due with interest penalties for not making estimated payments.

There is income from capital gains related to the sale of securities in my father's personal investment account. There is also income listed for taking a RMD for an inherited IRA account, which also was the more significant source. We are liquidating the IRA account over 3 years.

I had advised my siblings to make an estimated tax payment last fall when I distrubuted the cash resulting from both of these events. I know that I did make such an estimated payment thinking all taxes would be paid through our personal 1040 filings.

So how do I proceed? Can I file the 1041 without making a tax payment? Did I miss a response in TurboTax that would have passed these obligations through to the beneficiaries on the K-1 and not show an obligation for the trust?