Does Your Living Trust Need to File a Tax Return?

​We’re often asked ”Does my living trust need to file a separate tax return?” The answer depends on the type of trust you have and how it’s structured…

Revocable Living Trusts
If your trust is revocable (grantor can change terms of trust) and you’re the trustee, then no separate tax return is required. All income is reported on your individual income tax return, using your Social Security number. For tax purposes, it’s as if the trust doesn’t exist separately.
 
Irrevocable Trusts
If your trust is irrevocable (can’t be reversed), it’s a different story. Irrevocable trusts are considered separate tax entities and generally must file their own tax return each year. The trust may also owe income tax, depending on how income is distributed or retained.
 
Considerations

• Has your trust become irrevocable due to the death of the grantor?
• Does your trust earn income (like interest, dividends, or rental income)?
• Have you appointed a successor trustee?

 
If you answered yes to any of the above, you’ll want to evaluate your trust's filing requirements.