FILE GRANTOR IRREVOCABLE TRUST SEPARATELY USING TRUST EIN

[ddranalli]

I filed Federal and PA State returns today using TT Deluxe Desktop. I am also Grantor for an Irrevocable Trust. The Trust is governed by the laws of NJ, where it was originally formed, but the assets are held according to the PA state of residence. Can I file separate Trust returns (Federal & PA) with the Trust EIN using TT Deluxe - or - do I have to amend my personal returns already filed?  In either case, I have to file a 1041, and the only way to get to the 1041 is buying TT Business, is that correct?

Thanks.

[MaryK4]

You will need TurboTax Business to file the 1041 Trust return using the trust EIN.  

For a Grantor Trust, the grantor is treated as the owner of the assets, and the income flows directly to your personal Form 1040.   If you did not include the income on your 1040, you will need to amend your personal returns. For Pennsylvania, starting in 2025, irrevocable grantor trusts are now "disregarded entities", so you may not be required to file a PA-41 for the trust.  

If this does not answer your questions, please clarify!  

[M-MTax]

You stated that you are the grantor, @ddranalli, but is this a grantor trust? [you should know that]

Regardless, if this is not a grantor trust or if it is but you're not using one of the prescribed optional methods of reporting (see link below), then you need to file a 1041.

See https://www.irs.gov/instructions/i1041#en_US_2025_publink1000286020

[Mike9241]

With a grantor trust, there are two ways to go. The trust owns the assets. However, the holder, such as a brokerage, is given your SSN (not the trust ein) and issues the tax reporting form using your SSN; no 1041 is required. If they are issued using the trust EIN, a 1041 is required, and it produces a grantor trust letter.

There are two thoughts on reporting a grantor trust letter in an individual's 1040. 1) Complete the k-1 for the trust. 2) ignore the k-1, and enter on the same forms that the items would be entered on if no trust existed

Of course, the best solution would be for TurboTax to creatoe K-1 for grantor trust reporting. . 

[ddranalli]

Hello, I am doing a relative's taxes.  She has dementia and is in a memory care facility.  My Wife is POA and Trustee (I am Successor Trustee). I filed the relative's Federal and PA returns today. The Trust is entitled a 'Grantor Trust' 'Irrevocable Trust Agreement' which has an assigned EIN.  The Trust 1099-INTs have the Recipient's TIN = Trust EIN.  My interpretation is that I should use Optional Method 2 which says the Trustee can report the 1099s to the IRS, but the instructions don't say how - and - the instructions say that the Grantor still has to include the Interest on their personal Returns. I am not sure what benefit it is to have the Trustee somehow report the 1099's to the IRS if the Grantor's personal return has to be amended to include the Interest anyway - just report the 1099's in the amended personal return.  So, I am back to square one.  I was hoping to file separate returns, including the 1099-INT Interest, using the Trust EIN. Please clarify what I need to do.  Thanks.

[ddranalli]

The Trust is a "Grantor Trust" "Irrevocable Trust Agreement". The Grantor is *living*. The Asset Holder, a Bank, issued the 1099-INTs to the Trust EIN.  So, I need to additionally buy TT Business and file a 1041 U.S. Income Tax Return for Estates and Trusts, correct?  I am assuming the 1041 includes reporting the 1099-INT Interest and determining the Federal taxes owed.  Is that correct?  If so, why is a 'Grantor Trust Letter' or Schedule K-1 needed in addition to the 1041?

Also, for PA, do I file the PA-41 and is that also only accessed through TT Business?

Thank you.