In What State Should Trustee File Return for Out-of-State Trust?

 In Irrevocable Trusts, Trustee
trust state tax return

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I live in New Mexico and am the sole trustee of a trust created in Colorado which is also where over 90% of the trust assets are located. I am paid compensation. To which state do I owe state income tax?


You don’t say whether it’s a revocable or irrevocable trust and whether you or someone else is the grantor. However, since you are paid compensation, I’ll assume it’s an irrevocable trust and you are not the grantor. In that case, the trust should have a tax identification number and file a Colorado trust income tax return. The payments to you as trustee will be deductions on that return. The trust should issue you a 1099 reporting the income, and you must report your income as trustee on your New Mexico personal return.

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