Does Spouse Who Acts as Trustee Have to Report Her Trustee Fee?
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?
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.
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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