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Estimated taxes for a trust

Philc56 — Sat, 13 Mar 2021 12:01:54 GMT

My mother's irrevocable trust sold its house in January of 2021 to pay for her continuing care. There is a substantial capital gain. The trust had zero taxes in 2020. Does the trust need to pay estimated taxes in 2021?

Re: Estimated taxes for a trust

Anonymous_ — Sat, 13 Mar 2021 15:08:30 GMT

See https://www.irs.gov/instructions/i1041#idm140229122357664

Generally, an estate or trust must pay estimated income tax for 2021 if it expects to owe, after subtracting any withholding and credits, at least $1,000 in tax, and it expects the withholding and credits to be less than the smaller of:

90% of the tax shown on the 2021 tax return, or
100% of the tax shown on the 2020 tax return (110% of that amount if the estate's or trust's adjusted gross income on that return is more than $150,000, and less than ²/₃ of gross income for 2020 or 2021 is from farming or fishing).

However, if a return was not filed for 2020 or that return didn't cover a full 12 months, item 2 doesn't apply.

Re: Estimated taxes for a trust

Philc56 — Sat, 20 Mar 2021 11:01:28 GMT

Thank you tag team!

I read those instructions and I noticed exceptions at the bottom of that column:

Exceptions. Estimated tax payments aren’t required from:

1. An estate of a domestic decedent or a domestic trust that had a full 12-month 2020 tax year and had no tax liability for that year;

I was wondering if the underlined phrase applies to my situation.

Re: Estimated taxes for a trust

Anonymous_ — Sat, 20 Mar 2021 15:07:36 GMT

@Philc56 wrote:
I was wondering if the underlined phrase applies to my situation.

Yes, that would apply to your situation provided the trust's tax year was a full 12 months in 2020.

Re: Estimated taxes for a trust

Philc56 — Sat, 27 Mar 2021 12:30:22 GMT

Thank you, again!