When filing a Trust return, what yr do I enter the Trustee fee? The yr of the associated tax return? (which is actually Feb. of the sub. yr when the 1099-INT is rec’d).

[GSTgst]

When I file an annual Fed Tax return for a Trust I list my Trustee’s fee as an expense. But my 2022 Trustee fee isn’t known and paid until Feb 2023 (for the 2022 Federal Tax Return) after I get the banks 1099-INT form.  I would think anything after 31 Dec would be accounted for on the following years tax return. But that doesn’t make sense either. That means I would file the 2022 Federal Return with the 2021 Trustee Fee because it was technically paid February 2022. Can anyone give me any insight into what to do?

[Anonymous_ · Accepted solution]

Trust are typically calendar year taxpayers and almost always report using the cash method of accounting.

As a result, expenses are deducted in the tax year in which they are actually paid.

[GSTgst]

So to confirm, when I file now for TY2022 for this small Trust, I am entering the Trustee fee for TY2021 since it was paid February 2022 (when I got the 1099-INT form from the bank which determines the Trustee’s fee).  Even though it was for the TY2021, it was actually paid in 2022 and therefore should go on the TY2022 tax return.  Sound right? 

[Anonymous_]

It makes no difference from where the income was derived nor in what year. The trustee fee is a deduction for the trust in tax year in which it is paid.