Money received from trust

Forum|Forum|2 years ago
April 3, 2024
1 reply
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I received money from my deceased father's trust in 2023. Do I owe taxes on the money received? They have yet to send me any forms for filing and they have not responded to my requests for the form.

Ask the Experts - MetLife IV - April 2024

DawnC

Level 15

Maybe, it depends on what kind of income you received from the trust. Trust beneficiaries must pay taxes on income and other distributions from a trust. Trust beneficiaries don't have to pay taxes on returned principal from the trust's assets. IRS forms K-1 and 1041 are required for filing tax returns that receive trust disbursements. The trust fiduciary should send you a k-1 if there was taxable income distributed to you.

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AMSDavisAuthor

Level 2

So if they haven't provided me with the forms as of today, is it safe to assume I don't owe taxes on the distribution? I've delayed filing my taxes but I don't want to file for an extension.

KrisD15

Level 15

Thanks - the fiduciary has not responded to our requests for the forms. I'm certain they've passed some critical deadlines and are likely in violation. Can I file without the form, or is it better to file an extension? I appreciate your help with this and your patience with my questions.

If you are unsure, you should file for extension until you get the proper answers you need to know if the income is taxable or not.

We (and you) do not have enough information to give a definitive answer.

If you file for extension, I suggest you calculate your return CLAIMING THE INCOME to see if any tax might be owed. An extension gives you more time to file, so you don't get a "Failure to File" penalty, but it DOES NOT give you extra time to pay your tax liability, so if you'll owe, you'll still have a "Failure to Pay" penalty.

Therefore, include the income and if you'll owe tax, pay that as a 2023 Estimated Tax Payment. A payment can be included with your extension.

If including that income from the Trust results in a refund, you can just file the extension with no payment.

Even if you make a payment with your extension, and the trust payment ends up being non-taxable, you will get the estimated payment amount included in your refund. (Be sure that the tax payment is reported on the final return you file

under

Deductions & Credits

Estimates and Other Taxes paid

Estimates)

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