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babalouee
New Member

Irrevocable Trust

I have a brokerage account in an irrevocable trust with it's own TIN. How do I claim the interest on my personal return return?

5 Replies
Anonymous
Not applicable

Irrevocable Trust

irrevocable trust means nothing.   a critical question is - is the grantor (the person who put the assets in the account) the same as the beneficiary or the beneficiary's spouse.     this or certain other abilities of the grantor would make this a grantor trust.  the grantor would pick up the income.   if it is because there is an EIN number a grantor trust return must be filed.  

 

if it is not a grantor trust than a regular trust return must be filed.  whether the trust pays the taxes on the income or the income is distributed to the beneficiaries would depend on the wording of the trust. 

jtax
Level 9

Irrevocable Trust

For an irrevocable trust, as mentioned by @Anonymous you first need to determine if the trust (or sometimes just part of the trust) is a grantor trust. That will control where the income (or portions of the income) need to be reported.

 

Did the trust make distributions of income to beneficiaries (e.g. yourself)? If so and the trust is not 100% grantor trust, it will probably need to file a 1041 and include K-1s (which are like 1099s) to the beneficiary. The trust is taxed on income it retains, if any, the beneficiaries are taxed on income they receive.

 

This is quite complicated and you are best advised to go back to the attorney who wrote the trust for advice. Or second best a CPA or enrolled agent who prepares trust returns all the time and is very knowledgeable.

 

If you find out more about the trusts grantor status, free to ask more here.

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EU
Returning Member

Irrevocable Trust

What is the tax table used to compute taxes on the trust income (money Not transferred to beneficiaries)?

LeonardS
Employee Tax Expert

Irrevocable Trust

The 2019 Estate and Trust Income Tax Brackets are:

  • $0 to $2,600 in income: 10% of taxable income.
  • $2,601 to $9,300 in income: $260 plus 24% of the amount over $2,600.
  • $9,301 to $12,750 in income: $1,868 plus 35% of the amount over $9,300.
  • Over $12,750 in income: $3,075.50 plus 37% of the amount over $12,7505
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jtax
Level 9

Irrevocable Trust

If the trust has capital gains, which usually stay with the trust, those are taxed at a lower rate:

 

LONG-TERM CAPITAL GAINS 2019
Rate Single Married Filing Jointly Married Filing Separately Head of Household Trusts & Estates
0% $0-$39,375 $0-$78,750 $0-$39,375 $0-$52,750 $0-$2,650
15% $39,375-$434,550 $78,750-$488,850 $39,375-$244,425 $52,750-$461,700 $2,650-$12,950
20% $434,550+ $488,850+ $244,425+ $461,700+ $12,950+

 

(from https://www.chernoffdiamond.com/services/private-client-executive-life-insurance/private-client-reso...)

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