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Trust Tax Returns


Trusts are instruments that are commonly used for estate and gift tax planning purposes or for asset protection in the case of contingent liabilities. They generally hold assets on behalf of beneficiaries and can be structured in many different ways to try to achieve the goals for which they were created. Annual trust tax returns are generally required for most U.S. Trusts and certain Foreign Trusts that have U.S. assets or U.S. grantors or beneficiaries. 


U.S. Trusts

U.S. Trusts are generally required to file Form 1041 to report the financial activity of the trust for the year and pay any trust taxes applicable. Depending upon the nature of the trust, the powers of the grantor under the trust documents, and the type of income inside the trust, some income/loss may be deemed to be taxable to the grantor of the trust, some may be passed-through to the beneficiaries of the trust, and some may be taxed at the trust itself. 


Foreign Trusts

Foreign trusts considered to have a U.S. owner must generally file Form 3520-A to report certain information regarding the trust, its assets/liabilities, its distributions to beneficiaries, and its annual income. Even if there are no U.S. owners, foreign trusts with U.S. assets that are treated as non-grantor trusts are required to file Form 1040-NR to report any income generated by the U.S. assets.


Elisa Fay


Partner-in-Charge Rödl National Tax

+1 404 525 2600

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