Must Trust With No Income File Return?

 In Irrevocable Trusts
Irrevocable trust tax return

Photo by Olga DeLawrence on Unsplash


My husband and I have our home in an irrevocable trust with no income. Do we file a regular personal income tax return (1040) with no mention of the trust?


That’s right, you don’t need to mention the trust. If the trust had income, you would have to obtain a separate tax identification number for it and file a 1041 tax return for it. But that’s not necessary if it has no income.

If, on the other hand, you rented out the property, here’s how it would work. Assuming that you would distribute the net income to yourselves, the trust would report the rental income and the costs of maintaining the property on its tax return. It would then also deduct the income distributed to you and your husband so that no tax would be paid at the trust level. Instead, the trust would issue you and your husband a K-1 reporting the net income coming to you. You would then report this on your return as you would income on 1099s from banks and other financial institutions.

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