A trust has its own tax rules, its own return and, for many trusts, its own tax bill. We work with trustees, families, and their attorneys to keep trusts compliant every year and to plan distributions so the family pays less tax overall.
Trusts we work with
- Revocable living trusts, during the grantor’s life and after
- Irrevocable trusts, simple and complex, grantor and non-grantor
- Intentionally defective grantor trusts and other estate planning trusts
- Trusts for children and grandchildren, including dynasty and generation-skipping trusts
- Special needs and qualified disability trusts
- Trusts that own S corporation stock: QSST and ESBT elections
Trust tax services
- Annual trust income tax returns (Form 1041), Pennsylvania fiduciary returns (PA-41), and returns in other states
- Schedules K-1 for beneficiaries, so each one reports the right share of income
- Grantor trust reporting, including optional reporting methods
- Trust accounting: income versus principal, expenses, and distributions under the trust document and state law
- Net investment income tax and quarterly estimated payments for trusts
- Gift tax returns (Form 709) when a trust is funded, including generation-skipping tax allocations
- Basis tracking and sales of trust assets, including inherited property
- Final returns when a trust ends and its assets are distributed
- Obtaining an EIN and setting up the trust’s books
Planning distributions
Income a trust keeps is taxed at the highest federal rate at a much lower income level than for individuals. Income it distributes is usually taxed to the beneficiaries instead, often at lower rates. We model the numbers before year-end, and a trust or estate can elect to treat distributions made in the first 65 days of the next year as made in the current year.
When someone passes away
- Final income tax return of the person who passed away (Form 1040)
- Estate income tax returns (Form 1041) during administration
- Election to treat a revocable trust as part of the estate (Section 645)
- Pennsylvania inheritance tax return (REV-1500)
- Estate tax (Form 706) and gift tax (Form 709) returns, when needed
We handle the tax and accounting side. Trust documents, wills, and probate are prepared by your attorney, and we work together with them.