We do not have any stocks, money market accounts or anything that really makes money, just a small savings account. The trust has mainly the house, vehicles, personal property, and then our checking and savings account. After we are gone everything will go to our daughter. Wondering if we need to file something special.
A revocable trust does not need to file a separate income tax return. If the trust was irrevocable it would need to file an income tax return.
The IRS considers a revocable trust to be a "disregarded entity" meaning it doesn't exist for tax purposes. Any income that is generated inside the trust - the savings account for example - will be reported to you on a 1099-INT with the name of the trust as the owner but with your Social Security number. You'll simply enter that 1099-INT on your own income tax return, and that's the end of it.
Living trusts serve mainly as probate-avoiding vehicles and are popular for that reason and because no separate income tax reporting is necessary.
Tom Young
A revocable trust does not need to file a separate income tax return. If the trust was irrevocable it would need to file an income tax return.
The IRS considers a revocable trust to be a "disregarded entity" meaning it doesn't exist for tax purposes. Any income that is generated inside the trust - the savings account for example - will be reported to you on a 1099-INT with the name of the trust as the owner but with your Social Security number. You'll simply enter that 1099-INT on your own income tax return, and that's the end of it.
Living trusts serve mainly as probate-avoiding vehicles and are popular for that reason and because no separate income tax reporting is necessary.
Tom Young
I'm sure that you're aware that creating a trust is one thing, and transferring assets to the trust is a totally different thing. I point this out because I've known people who have created a trust, yet have put nothing in it and the problem it creates does not come to light until they die, and their will leaves everything in the trust to the heirs. With nothing in the trust, the heirs get exactly that..........nothing.
I do note that you indicate that you have "IN FACT" transferred property to the trust, such as your house. (Meaning that the trust is listed as the owner of the property on the deed). The trust will need to file it's own separate tax return. For that, you will need TurboTax Business (different from Home and Business). I *H*I*G*H*L*Y suggest you consult with a tax professional in your local jurisdiction for the first year dealing with this. Especially if your state taxes personal income. Otherwise, if this is done incorrectly, you will leave your heirs in a never ending highly expensive nightmare from which they will NEVER awaken.