Does Spouse Who Acts as Trustee Have to Report Her Trustee Fee?
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Question:
Is a trustee fee paid to the wife from her husband’s Revocable Trust taxable income to be reported on a married filing jointly federal tax return?
Response:
Arguably yes, but I don’t think this ever happens, neither the payment of a trustee fee nor its being reported as income. I can’t think of how there would be any benefit to the payment of a fee in the circumstances you describe. In order to deduct the fee as an expense, the husband would have to get a separate tax identification number for the trust and file an annual tax return. But any tax savings created by such a deduction would be offset dollar-for-dollar by the wife’s additional income. If the couple is keeping their finances completely separate and they want to use the wife’s role as co-trustee as a basis for transferring funds from the husband to her, it would be much easier to simply make the transfer without any tax reporting.
Related Articles:
What is the Tax Treatment of Trustee Fees?
Is a Trustee Entitled to Compensation?
Can a Trustee be Paid as a Gift and Not Incur Income Taxes?
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