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bladelink1
Level 2

Does anybody who gets money from a trust have to file a K-1 with their return?

My wife is the trustee for a trust left by her now-deceased parents. She's been sending small amounts of money to one of her sisters to supplement her social security income. Does the sister need to file a K-1 with her return? The trust will file it's own taxes with a K-1, but does anybody who receives money from the trust need to do the same?

1 Best answer

Accepted Solutions
ErnieS0
Expert Alumni

Does anybody who gets money from a trust have to file a K-1 with their return?

Provide Schedule K-1s to any beneficiaries of a trust who receive distributions. If your wife’s sisters are beneficiaries then your wife should be sending them K-1s.

 

If your wife is the sole beneficiary and is gifting the money to her sisters—and reporting all the beneficiaries share of income on her tax return—then no K-1 is necessary.

 

A trust does file its own tax return. However, it is a so-called “pass-through” entity. The trust does not pay tax on the income it passes through to beneficiaries. The beneficiaries pay tax on their share, according to the proportion of the distributions. That proportion is reported on Schedule K-1.

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2 Replies
ErnieS0
Expert Alumni

Does anybody who gets money from a trust have to file a K-1 with their return?

Provide Schedule K-1s to any beneficiaries of a trust who receive distributions. If your wife’s sisters are beneficiaries then your wife should be sending them K-1s.

 

If your wife is the sole beneficiary and is gifting the money to her sisters—and reporting all the beneficiaries share of income on her tax return—then no K-1 is necessary.

 

A trust does file its own tax return. However, it is a so-called “pass-through” entity. The trust does not pay tax on the income it passes through to beneficiaries. The beneficiaries pay tax on their share, according to the proportion of the distributions. That proportion is reported on Schedule K-1.

View solution in original post

bladelink1
Level 2

Does anybody who gets money from a trust have to file a K-1 with their return?

Thanks, that's very helpful and pretty much what I had thought, but was hoping to confirm. My wife's sister isn't a listed beneficiary of the trust. It is, indeed, just money "gifted" to her. Thanks for the quick and helpful reply!

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