Grantor Trust Taxation: What Does It Mean?

Trust can be very confusing, and they can get even more confusing when you start talking about how they pay income tax. There are options for trust to be treated as separate taxpayers, but one of the best ways to leverage a gift to someone else is to have the trust tax as a grantor trust. This video will discuss the ramifications and what needs to happen if someone other than the trustee is responsible for paying the income tax generated within a trust. 
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Strohmeyer Law is a law firm based in Houston, Texas, specializing in tax law, estate planning, and probate law.
Nothing in this video is specific legal advice for you. Watching or commenting on this video doesn't create an attorney-client relationship.
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[@truthbetoldministries8883]

How do I report an overpayment of estimated taxes for a grantor trust? Will I still need a 1041 or just a 1040 since it is a grantor trust?

[@strohmeyerlawpllc]

Unfortunately, we can’t give specific advice on this channel. You should work with a professional tax preparer who is familiar with your specific circumstances to file the appropriate returns.

[@artlover7638]

Does a Grantor Trust where the grantor pays taxes on the trust during his lifetime get step-up basis benefits after the grantor dies ?

[@strohmeyerlawpllc]

It will depend on the trust agreement because paying the income tax on the trust as the grantor is not the test for getting a basis step-up. It's possible to set up grantor trusts that either do get the basis step-up or don't get the basis step-up. You'll need to work with your own advisors to get an answer for your specific situation.

[@artlover7638]

@@strohmeyerlawpllc Thank you for answering the question. Would love to see you do a video showing what is the test for a Grantor Trust. I wonder if one of the test for step-up basis might be the revocability of the trust?