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If you receive payments of money from an irrevocable trust during the year, it isn’t necessary for you to make the determination of whether to report the payments on your tax return.
The IRS requires the trustee to prepare a Schedule K-1 for each beneficiary when filing the trust’s 1041.
As of 2012, eight states impose inheritance taxes of between 10 and 16 percent on amounts over the individual state exemption.
If your dad lived in Indiana, Iowa, Kentucky, Maryland, Nebraska, New Jersey, Pennsylvania or Tennessee, be prepared to pay up if your mutual funds proceeds exceed the exemption.
On the other hand, if the money you receive represents a portion of the trust principal, or income the trust has already paid taxes on, you receive the distribution without any tax consequences.
An irrevocable trust is treated as a separate taxpayer and must file a federal income tax return on Form 1041 each year.
If the fund was worth ,000 on the day he passed and you sell it a year later for ,000, you owe taxes on that ,000 capital gain.
However, if you sell it for ,000, you can declare a ,000 capital loss.
The trust is created when a person, called the “grantor,” establishes the terms of the trust in accordance with state law, such as naming beneficiaries and funding the trust with money or property.Tags: Adult Dating, affair dating, sex dating