Income tax for Trusts and Estates are filed using Form 1041. It is the executor, trustee, or administrator that is referred to as the fiduciary – the responsible party. Income tax rules for trusts and estates are similar to personal (individual) income taxes. However important differences exist. To name a few.

• Trust or estate income need only be about $11,000 to be in the top ordinary income tax bracket. This compared too many tens of thousands of dollars of taxable income for an individual. Because of this, it is typically better to have the income taxed to the beneficiaries, not the trust. However, many circumstances may require the trust to pay some or all of the tax, or it may be better overall for other nontax reasons.
• The use of fiduciary accounting influences how much taxable income may be allocated to beneficiaries through the income distribution deduction.
• Capital gains and losses, while subject to the same preferential rates as on personal tax returns, are generally allocated to principal and the trust or estate, not the beneficiaries, pays the capital gains income tax.

• Accurate and timely preparation of tax returns
• Coordination of multiple tax returns – returns for individual income tax, trust/estate income tax, & estate tax
• Tax elections and forms are handled
• Proper fiduciary accounting
• Annual update when doing each year's personal or trust income tax return – identify issues that may require additional estate planning work