I am the trustee of an irrevocable trust. I live in California. I have control over a beneficiary trust for a younger relative who resides in Oklahoma. For his trust tax return, which state should I download so I can generate a K-1 for him ? I need California for my own beneficiary trust because I reside in California. But for the relative's trust return, should I also buy the Oklahoma state ? The cost isn't an issue, I just want to do the taxes correctly.
Also, can California state and Oklahoma state co-exist in Turbotax business, and then can I select the one that I wish to use for each tax return ?
The income for the trust is taxable to the state where the income is produced. If the income for the trust is located in California then Yes if your distribute income to your nephew in Oklahoma he would need to file a California return and pay the California tax on the income.
The same thing is true for individuals, even though they reside for example in Nevada, but they work in California they have to file and pay state tax to California for all work performed in California.
@Jeff_txx
The two states can "co-exist" in TurboTax, but you really only need the state in which there is a filing requirement.
From what you have posted, that state would be California unless the trust had Oklahoma source income (e.g., owned income-producing rental property in that state).
If I pass my nephew's trust income through to him, Turbotax will generate a California K-1 for him. I don't want to give him a California K-1. He lives in Oklahoma, and he would ask me why is he getting a California K-1 ? He would ask me why he has to pay California if he resides in Oklahoma ? I don't want to have to deal with that. Therefore, I have retained the income in the trust. The trust will pay all taxes, Federal and California state. It's more expensive that way, but it's simpler, and I don't have to deal with questions I can't answer.
The income for the trust is taxable to the state where the income is produced. If the income for the trust is located in California then Yes if your distribute income to your nephew in Oklahoma he would need to file a California return and pay the California tax on the income.
The same thing is true for individuals, even though they reside for example in Nevada, but they work in California they have to file and pay state tax to California for all work performed in California.
@Jeff_txx