I am filing a personal tax return on behalf of a parent who has dementia. I handle her business and personal issues as a trustee of her revocable trust and I receive a trustee's fee for my services. I understand that the trustee fee is deductible on my mother's personal return and will be income to me.
I am using the Turbotax Deluxe program for my mother's tax return and I haven't seen any question in the step by step instructions that calls for me to insert the trustee fee as a deduction for my mother. How would I accomplish this? What specific tax form and line lists this type of deduction? Thank you.
Unless the trust has become irrevocable, and a separate entity filing a 1041, a trustee's fee is not going to be deductible on a personal income tax return (1040).
Why is there a distinction between the treatment for an irrevocable and revocable trust? If the trustee fee is not deductible to the payor, does it follow that the fee would not be taxable to the trustee as the recipient of funds that have already been fully taxed?
The distinction is basically between grantor and nongrantor trusts.
Grantor trusts are treated as disregarded entities for federal income tax purposes (i.e, the assets in grantor trusts are treated as "owned" by the grantor and inseparable therefrom for federal income tax purposes).