Form 1041 for Trust 1099-G (MD State Refund) and Federal Refund Help

[cwdjr1964]

Because I mistakenly had State and Federal taxes withheld from an annuity death benefit, my deceased mother's trust received a refund (both state and federal). MD will most likely issue the trust a 1099-G for this refund. I think this will be considered taxable income and I will enter it in the same manner as the 1099-R on last year's (2022) return. Since the Federal return is not taxable according to TT Business (see screenshot), does the Federal return even need to be reported next year (tax year 2023)? TT Business would seem to indicate that it is not. Thoughts?

[Anonymous_]

Does the total income that accrued to the trust exceed the trust's exemption (either $100 or $300, depending).

If the state tax refund was reported on a prior return and deducted as such, then the refund is taxable for federal income tax purposes. Where and how were state taxes reported on the prior return?

[cwdjr1964]

The MD state tax refund received in 2023 was in excess of $300. The 2022 tax year return was an initial return. No MD state income taxes were received or reported on the 2022 tax year return.