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Level 4
posted Feb 19, 2025 11:21:34 PM

What happens if a Beneficiary of a Trust doesn’t pay income taxes from a K-1 Inherited IRA Distribution?

This is a hypothetical question but I am just curious. Let’s say that the beneficiary purposely doesn’t pay income taxes to the IRS from a K-1 Inherited IRA distribution. Will the IRS go after the Trust for the beneficiary’s taxes? If so, it’s just one more reason not to close out a Trust prematurely and to have monies available for such a situation or else the Trustee will be responsible.

0 1 2011
1 Replies
Level 15
Feb 19, 2025 11:35:11 PM

Normally, the trust would not be responsible for the taxes the beneficiary owes unless it received a notice to do backup withholding and failed to do so. However, if the IRS can prove the beneficiary is trying to pull some tax scam, then it might be able to go after trust assets