Does the Trustee File Tax Returns For a Trust?

If you wonder “does the trustee file tax returns for a trust,” the answer is yes! Trustees play a leadership role in the administration and management of a trust. Filing taxes is one of the many jobs a trustee must complete.

Here in Naples, Florida trust lawyer James Nici can help a trustee understand their required tasks as well as help you create a trust and select a trustee.

A Trustee Needs to File Tax Returns for a Trust

A trustee must file an annual income tax return for a trust if the trust earned more than $600 in income during the tax year. The trustee must use Form 1041, Income Tax Return for Estate and Trusts. The form requires the trustee to report:

• The income and deductions of the trust;

• The income that is either being held for future distribution or currently distributed to the trust beneficiaries;

• Any income tax liability of the trust; and

• Employment taxes on wages paid to household employees.

Filing a federal income tax return for a trust takes time, care, and expertise. Let trust attorney James Nici explain the best way to ensure the responsibilities of the trustee, including filing an income tax return for the trust, are properly understood and completed.

What Happens If a Trustee Fails to File an Income Tax Return For a Trust?

There are serious consequences if a trustee fails to file an income tax return for a trust in Naples, or anywhere in the US. First, the IRS could impose significant penalties on the trust. Additionally, the IRS could charge interest on unpaid taxes and any penalties they assessed.

Also because the trustee is a fiduciary, they have a duty to manage and protect the trust assets. Therefore they can be held personally liable for the failure to file tax returns and the consequences of that failure. The beneficiaries or other interested parties could require the trustee to repay the lost money out of their personal finances. They could also ask the court to remove the trustee. If you are named as a trustee, you may find it helpful to work with Naples trust lawyer Nici to ensure taxes are filed on time and correctly.

Call A Naples Trust Lawyer

The Nici Law Firm serves clients in communities across Florida including Naples, Bonita Springs, Marco Island, Ave Maria, Immokalee, Estero, Fort Myers, Cape Coral, Sanibel and more. If you are interested in our fiduciary services or any aspect of estate planning, contact the Nici Law Firm.

As an experienced Florida attorney since 1994, specializing in the legal field of estate planning, he can guide you through setting up a trust, ways to fund a trust, choosing the trustee, and all aspects of utilizing a trust.  Also if you are a selected trustee and unsure of what to do, please also consult with Attorney Nici.

Contact our office at (239) 449-6150 to discuss your needs or use our web form to message our office.