Trust Tax Basics You'll Use
Grantor vs. non-grantor and when an EIN is needed
During life, many revocable trusts are "grantor" trusts-income reports under your Social Security number. After death, an irrevocable trust often needs an EIN and may file Form 1041. We make sure banks, advisors, and beneficiaries understand the change.
Distributions And Who Pays The Tax
Using the distribution deduction wisely
Trusts often deduct income they distribute, shifting tax to beneficiaries through K-1s. Keeping distribution timing and records aligned with your accounting prevents surprises in April. We'll show how cash flow and tax flow can be coordinated.
Capital Gains, Basis, And Real Estate Sales
Selling the house without tax guesswork
Whether it's a Highlands bungalow or a Jeffersontown rental, accurate basis and closing records matter. We help confirm date-of-death values, track improvements, and coordinate with title companies so gains are calculated correctly.
Retirement Accounts And Beneficiary Choices
Navigating RMDs and trust beneficiaries
Inherited IRAs have strict payout rules, and naming a trust as beneficiary requires careful drafting. We coordinate
estate planning
updates and beneficiary designations so your tax plan lines up with distribution goals.
Special Needs And Charitable Strategies
Purpose-driven planning with tax benefits
Some families blend a special needs trust or charitable bequests with long-term goals. We structure gifts and trustee powers so benefits are preserved and records support the return.
Local Tip For Kentucky Returns
State rules to keep on your radar
Kentucky treatment can differ from federal rules. We align CPA guidance with your accounting and reporting so filings are consistent across forms and schedules.
Answers To Trust Tax Questions
Five practical tax answers trustees ask us
Do we need an EIN for the trust?
If the trust is irrevocable after death or never was grantor, you likely need an EIN. We'll help you obtain one and notify banks and brokers.
Does the trust file its own tax return?
Many irrevocable trusts file Form 1041. Whether income is taxed to the trust or beneficiaries depends on distributions and the document's terms.
How are distributions taxed to beneficiaries?
Distributions generally carry out ordinary income first. Good records ensure K-1s match what was paid-no surprises at tax time.
What Kentucky issues catch people off guard?
Timing differences, basis tracking for local real estate, and inconsistent records. We match state reporting with federal totals to keep things consistent.
What tax records should we keep?
Bank and brokerage statements, closing files, invoices, appraisals, and year-end summaries. These support K-1s, gains, and fee disclosures if questions arise.