Trust Exemptions

Tax (Photo credit: 401K)

Similar to an individual’s personal exemption, estates and trusts are allowed an exemption amount [IRC §642(b)]. The value of the exemption depends on the type of trust.

Complex Trust $100
Simple Trust $300
Decedent’s Estate $600

It is short-hand to say that a “simple trust” is allowed a $300 exemption; the 1041 instructions read:

Trusts required to distribute all income currently. A trust whose governing instrument requires that all income be distributed currently is allowed a $300 exemption, even if it distributed amounts other than income during the tax year.

In years when a simple trust makes a distribution out of principal, it is considered a complex trust but it still allowed a $300 exemption.

Estates and trusts are not allowed a standard deduction; instead they may only take a deduction for amounts actually paid.


One thought on “Trust Exemptions

Did this post answer your question?

Please log in using one of these methods to post your comment: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s