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  • Hello, I'm Tammy from Turbo Tax with some information about fiduciary income tax returns.

  • Have you been appointed as trustee of a trust or the administrator of an estate?

  • If so, you may be interested to hear about the tax returns you are responsible for filing.

  • As a trustee or administrator, you are the fiduciary

  • of the trust or estate. This means 0that you are the person responsible

  • for overseeing the estate or trustwhich includes filing all necessary tax returns.

  • The IRS requires the filing of an income tax return for trusts and estates

  • on Form 1041— formerly known as the fiduciary income tax return.

  • This is because trusts and estates must pay income tax on

  • their income just like you report your own income on a personal tax return each year.

  • Trusts and estates can own the same type of property that you can.

  • For example, a trust may own a stock portfolio or rental real estate.

  • And when the stocks pay dividends or tenants pay rent

  • the income belongs to the trust. But the IRS

  • doesn't allow a trust or estate to receive the income tax free.

  • This is where the 1041 comes in--

  • you need to report this rental and dividend income on the return.

  • However, trusts and estates can also take deductions to reduce their taxable income.

  • For example, if you authorize a payment for repairs to real estate in the trust--

  • those costs are deductible on the 1041.

  • One interesting feature of the 1041 is that you can deduct

  • some or all of the payments you make to beneficiaries.

  • Suppose the trust document requires that all dividends be paid

  • to beneficiaries or provides you discretionary authority to do so.

  • In this case, the beneficiaries will report the dividend income on their personal returns.

  • You still report the dividend income on the 1041—

  • but you also report a deduction for the beneficiary

  • distributions in a later section of the return.

  • One thing to remember as a fiduciary is that you are responsible

  • for filing the 1041 on behalf of the trust or estate.

  • Any taxes due are usually paid out of the trust or estate property.

  • If you're filing a 1041 on behalf of an estate or trust,

  • our TurboTax Business product will walk you through it, step by step.

  • For more information about 0this and other tax topics, visit

Hello, I'm Tammy from Turbo Tax with some information about fiduciary income tax returns.

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