Is a Schedule K-1 needed when I pay tuition from a trust?

[linkmendall]

I am the trustee for a college trust for my niece.  I made my first tuition payment from the trust last year and I'm wondering if that counts as a "distribution" to my niece (even though the $ went to the school, not her).  Do I need to create a Schedule K-1 for this distribution?

[Anonymous_]

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@linkmendall wrote:

I am the trustee for a college trust for my niece.  I made my first tuition payment from the trust last year and I'm wondering if that counts as a "distribution" to my niece (even though the $ went to the school, not her).  Do I need to create a Schedule K-1 for this distribution?

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If the trust had income, then that income would be passed through to the beneficiary when a distribution was made.

However, capital gains typically remain with the trust and the trust pays any tax due on those gains. 

Therefore, whether or not the trust or beneficiary pays any tax due, depends upon what was distributed. If only principal (corpus) of the trust was distributed (i.e., paid to the school) then no tax is due and no K-1 needs to be issued.