How are trusts taxed in Massachusetts?

Laws, ch. 62, § 10(a), (c). The taxation of trusts is similar to the taxation of individuals in that resident trusts are taxable on all of their income, regardless of source, and nonresident trusts are taxable only on income sourced to the taxing state.

Is a trustee responsible for paying taxes?

The executor or the trustee is personally liable for filing the estate tax return and paying any tax due. To protect himself or herself, the executor or trustee should make a request for early determination of the tax and discharge from personal liability under IRC section 2204.

How are trustee fees taxed?

Trustee fees are an income tax deduction for the trust but taxable income to you. You must declare these fees on your Form 1040, where you place them on line 21, Other Income. If you’re a professional trustee, this income is also subject to Self-Employment Tax. Otherwise, it’s income taxable only.

What expenses can a trustee deduct?

Following are examples of deductions that trustees may be permitted to utilize on the trust’s income tax return:

• Repairs to real estate held by the trust.
• Some or all of the distributions made to the beneficiaries of the trust.
• State, local, and real property taxes.
• Expenses of the estate.

What state are trusts taxed in?

A trust can be considered to be a resident by more than one state. Only seven states do not have a fiduciary income tax: Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. That leaves 43 states, plus the District of Columbia, that can tax trusts.

Who must file a Massachusetts fiduciary return?

Every executor, administrator, trustee, guardian, conservator, trustee in a noncorporate bankruptcy or receiver of a trust or estate that received in- come in excess of $100 that is taxable under MGL ch 62 at the entity level or to a beneficiary(ies) and that is subject to Massachusetts jurisdiction must file a Form 2.

How are beneficiaries taxed in a Massachusetts trust?

Rather, the beneficiary will be liable for making estimated tax payments, as applicable, on Form 1-ES. The trustee can deduct on Form 2 the income attributable to the beneficiary. Example 2: a Massachusetts trust has two beneficiaries. Each beneficiary has a 50% interest in the trust.

How does a trustee file a Massachusetts tax return?

A trustee or other fiduciary receiving income taxable to a beneficiary under G.L. c. 62, § 10 (h), must file with Form 2 a Form 2K-1, Beneficiary’s Massachusetts Information , [3] and include thereon (1) the items of income attributable to the beneficiary and (2) the taxpayer identification number of both the beneficiary and the estate or trust.

Which is an example of a Massachusetts trust?

Example 2: a Massachusetts trust has two beneficiaries. Each beneficiary has a 50% interest in the trust. One beneficiary is a Massachusetts resident; the other is a nonresident. Each year all of the trust’s income is distributed to the two beneficiaries.

Can a nominee trust be recorded in Massachusetts?

The estate planning attorney would establish a nominee trust of which the revocable trust was sole beneficial owner. Only the nominee trust would be recorded. Consistent with most other states, Massachusetts now permits a Trustee’s Certificate to be recorded instead of the entire trust (MA gen.

A trustee or other fiduciary receiving income taxable to a beneficiary under G.L. c. 62, § 10 (h), must file with Form 2 a Form 2K-1, Beneficiary’s Massachusetts Information , [3] and include thereon (1) the items of income attributable to the beneficiary and (2) the taxpayer identification number of both the beneficiary and the estate or trust.

Rather, the beneficiary will be liable for making estimated tax payments, as applicable, on Form 1-ES. The trustee can deduct on Form 2 the income attributable to the beneficiary. Example 2: a Massachusetts trust has two beneficiaries. Each beneficiary has a 50% interest in the trust.

How is estate taxed under the Massachusetts tax code?

G.L. c. 62, § 10 (h). The amount of estate or trust income to be accounted for by the beneficiary is to be adjusted to account for differences between the calculation of federal taxable income under the Internal Revenue Code (“Code”) and the calculation of Massachusetts taxable income under c. 62. Id.

Example 2: a Massachusetts trust has two beneficiaries. Each beneficiary has a 50% interest in the trust. One beneficiary is a Massachusetts resident; the other is a nonresident. Each year all of the trust’s income is distributed to the two beneficiaries.