When I created my revocable trust in 2023, our lawyer got an EIN for it at the same time. A couple weeks later I got a letter from the IRS with the EIN, and a statement saying I would need to file a 1041. The trust has earned some small amount of interest (<$100), but I thought the1041 is filed only after the grantor dies, and the grantor is me, still alive at this writing. Do I still need to file the 1041 for 2023 if no one died?
You have filing options with a grantor trust.
See https://www.irs.gov/instructions/i1041#en_US_2023_publink1000286018
Thanks, but I read that IRS doc already and that does not clear it up, or more likely I just can't make sense of it. I am not asking which option to use, I am asking whether I need to file a 1041 at all.
No, you are not required to file Form 1041 until the trust has earned at least $600 taxable income. For more information see 'Who Must File' below.
Who Must File: 2023 Instructions for Form 1041
Decedent's Estate:
The fiduciary (or one of the joint fiduciaries) must file Form 1041 for a domestic estate that has:
1. Gross income for the tax year of $600 or more;
2. A beneficiary who is a nonresident alien; or
3. If you held a qualified investment in a qualified opportunity fund (QOF) at any time during the year, you must file your return with Form 8997 attached. See the Form 8997 instructions.
@NCwillow wrote:
.........I am asking whether I need to file a 1041 at all.
You would only need to file a 1041 if you gave your broker (or other financial institution) the EIN of the trust and the 1099s you received contained the name of the trust and its EIN. In that event, you would file a 1041 and a grantor information statement (not a K-1).
More likely, your financial institutions are still issuing 1099s with your name and social security number, in which case you would simply report everything directly on your 1040.
Great. So I did in fact change my bank savings accounts into trust accounts with the EIN and the 1099s I received did have that EIN on them so it looks like I do indeed need to file the 1041 just showing that meager interest (<$100), compute the tax, and then use the Grantor Information Statement. So can you please explain just what that information statement is and how is it used? Using a Google search I see many different forms of this document. Can you point me to what it should look like? Thanks!
Basically, you issue this statement to yourself and report the information on the statement on your personal income tax return (1040).
That’s where I get confused. The IRS instructions say:
“The fiduciary (or one of the joint fiduciaries) must file Form
1041 for a domestic trust taxable under section 641 that has:
1. Any taxable income for the tax year;
2. Gross income of $600 or more (regardless of taxable
income)”
So, my trust received some interest in 2023 (<$100), so, by item 1, I have taxable income and therefore need to file 1041. But by item 2, the interest is less than $600, so I don’t need to file 1041. Can you clear that up at all? Thanks.
Great info! So I issue this form to myself, enter the info on my 1040, and then what happens to the grantor info sheet? Do I just file it somewhere here at home or does it need to go to the IRS?
OK, so does the Grantor Information Letter go along with the 1041 to the IRS, or is the Grantor letter filed with my 1040?
Thanks. If I file my 1040 electronically using TT, is it ok to just send the 1041 and GIS via regular post?
Thank you for your responses. You have answered my questions. Just one final thing. In one of your responses you said "Also note that you can change filing methods (which might be a good idea)"
What did you mean by this and how is it relevant to our other exchanges? Thanks.
I see. It seems that my lawyer that set up the trust should not have applied for the EIN in the first place to cause this issue. I will look into that.
Thanks for solving my problem!
OK, so looking at the GIS blank form, and since my trust has its own EIN, I can see that would be entered at the top of the form.
Then under the "Grantor Information" section there is a place for my name, as Grantor, and then a place for "Identifying Number". Do I enter my SSN here?
Well, I came across another question. So I file the 1041 along with the Grantor Information Sheet that links the trust EIN with my SSN. Now, when I enter the interest from the 1099-INT from the bank onto the 1040, I don't see any way to link it to the trust, or is the trust not mentioned in the 1040 and it just is entered as if there is no trust? Thanks.