Do Trusts Get 1099s? – Don’t Make This Mistake + FAQs

Yes – trusts can and do receive IRS Form 1099s when they earn reportable income, but how and by whom those forms are issued depends on the type of trust and its tax status.

If you have a trust and wonder whether it gets a 1099, the answer will vary based on whether the trust is revocable or irrevocable, and whether it’s classified as a grantor trust or a separate tax entity.

Trusts 101: Understanding Trust Types and Tax Status

To grasp why some trusts get 1099s and others don’t, we first need to understand how trusts are categorized for tax purposes. Trusts come in different flavors, but a key distinction is whether a trust is revocable or irrevocable and whether it is treated as a grantor trust or a non-grantor trust. These classifications determine who is considered the owner of the trust’s income in the eyes of the IRS – which in turn determines who receives the 1099 forms.

Revocable (Living) Trusts – Grantor Trusts in Disguise

A revocable living trust is a trust that the creator (also called the grantor, settlor, or trustor) can change or cancel at any time. Because the grantor retains control, the IRS doesn’t view a revocable trust as a separate taxable entity during the grantor’s lifetime. Instead, all income of a revocable trust is treated as the grantor’s income. In tax terms, it’s a grantor trust, meaning the grantor is the owner for income tax purposes.

• Tax ID: A revocable trust typically uses the grantor’s Social Security Number (SSN) as its taxpayer identification number. Often, a separate Employer Identification Number (EIN) for the trust isn’t needed while the grantor is alive.
• 1099 Forms: Because the IRS treats the grantor and the trust as the same entity, 1099s for a revocable trust’s income usually go to the grantor. For example, if a bank account is held in the name of “The Smith Living Trust” but it’s revocable and uses John Smith’s SSN, the bank will issue a Form 1099-INT (interest income) to John Smith (or to the trust name c/o John’s SSN). Essentially, the income is reported on the grantor’s personal tax return (Form 1040), not on a separate trust return.
• No Separate Tax Return: A purely revocable trust doesn’t file its own income tax return while the grantor is alive. All income and deductions are reported on the grantor’s Form 1040. So, the trust itself doesn’t “get” a 1099 in the sense of a separate taxpayer – any 1099 is effectively the grantor’s.

✅ Example: Jane Doe has a living trust that is revocable. She funds it with investment accounts and rental property. All the interest, dividends, and rent the trust earns are taxed to Jane. Financial institutions issue 1099 forms listing Jane’s SSN (sometimes noting the trust’s name as well). Jane includes that income on her 1040. The trust doesn’t file a Form 1041 or pay taxes separately. In short, a revocable trust does not receive its own 1099s – those forms go to the grantor, because for tax purposes, Jane is the trust.

Irrevocable Trusts – Separate Tax Entities (Sometimes)

Unlike a revocable trust, an irrevocable trust generally cannot be changed or canceled by the grantor once it’s created (with some limited exceptions or special provisions). Because the grantor gives up control, irrevocable trusts are usually treated as separate taxable entities. An irrevocable trust will have its own EIN and must file a Form 1041 (U.S. Income Tax Return for Estates and Trusts) each year if it has enough income.

However, not all irrevocable trusts are alike – some are structured to be grantor trusts (taxed to the grantor), while others are non-grantor trusts (taxed to the trust or beneficiaries). Let’s break down how each works:

Irrevocable Grantor Trusts

It may sound counterintuitive, but it’s possible for an irrevocable trust to still be treated as a grantor trust for tax purposes. This happens when the trust’s terms give the grantor (or sometimes the grantor’s spouse) certain powers or benefits as defined in IRS rules (Sections 671–678 of the Internal Revenue Code). Common examples include “intentionally defective grantor trusts” used in estate planning, where the trust is irrevocable but the grantor pays the income tax on its earnings.

• Tax ID: An irrevocable grantor trust usually obtains its own EIN, because legally it’s a separate entity. However, since it’s taxed to the grantor, the trust can opt to report income under the grantor’s SSN (similar to a revocable trust) or use the EIN with special reporting. There are IRS-approved methods for grantor trust reporting – one way is for the trustee to give all payors the grantor’s SSN so that 1099s come under the grantor’s name; another way is to use the trust’s EIN for 1099s and then provide the grantor with a statement of that income.
• 1099 Forms: If handled under the grantor’s SSN, the situation is just like a revocable trust – the 1099s will list the grantor as payee. If the trust uses its own EIN and receives 1099s itself, the trustee will pass through that information to the grantor. In practice, many banks and investment accounts ask upfront if the trust is a grantor trust. If so, they may issue tax forms under the grantor’s SSN to simplify reporting. Either way, the key point is that although the trust might receive a 1099, the income still gets reported on the grantor’s personal return, not taxed to the trust.
• Tax Return: A fully grantor trust typically doesn’t pay its own taxes. If it has an EIN and files Form 1041, it files only as an information return, attaching a statement that all income is reported on the grantor’s return. Often the trustee might issue an informal “grantor letter” or even a Form 1099 from the trust to the grantor to mirror what the trust received, ensuring the grantor reports it all.

✅ Example: The Johnson Irrevocable Trust is set up for estate planning but intentionally drafted so Mr. Johnson must pay the taxes (a grantor trust). The trust has an EIN and investment accounts. The brokerage issues a 1099-DIV to “Johnson Irrevocable Trust, EIN 12-3456789” for $5,000 of dividends. As trustee, Mr. Johnson prepares a simple letter to himself listing that $5,000 of trust income, or files a Form 1041 with a statement, so he includes it on his Form 1040. The IRS knows Mr. Johnson will pay the tax, even though the trust got the 1099 in its name.

Irrevocable Non-Grantor Trusts

Now we come to irrevocable non-grantor trusts – the scenario most people think of for a “trust” as a separate entity. A non-grantor trust means the trust itself (or its beneficiaries) is responsible for the taxes, not the grantor. Most irrevocable trusts fall in this category once the grantor no longer has any retained powers (for example, after the grantor’s death, a revocable trust becomes an irrevocable non-grantor trust).

• Tax ID: An irrevocable non-grantor trust must have its own EIN. The trust’s bank accounts, investments, and other assets will be tied to this EIN, completely separate from the grantor’s SSN.
• 1099 Forms to the Trust: When a trust is a separate taxpayer, any payor that pays the trust income will issue a 1099 to the trust (using its EIN), just as they would to an individual or business. For instance, interest from a savings account in the trust’s name will generate a Form 1099-INT addressed to the trust. Similarly, dividends on stocks the trust owns will come on a 1099-DIV to the trust, and proceeds from any sale of property or investments might come on forms like 1099-B or 1099-S in the trust’s name.
• Trust Tax Return (1041): The trust will report that income on its Form 1041 tax return. Here’s the twist: trusts often don’t pay all the tax themselves either. If the trust distributes income to beneficiaries, it usually gets a deduction for that, and the beneficiaries must report that income on their own taxes. How do beneficiaries know their taxable share? Through a Schedule K-1, which the trust issues to each beneficiary as part of the 1041 return.
• No 1099s to Beneficiaries: It’s important to note that beneficiaries do not receive 1099 forms for trust distributions. Trust distributions are not wages or independent contractor payments – instead, the taxable portions are reported on the K-1 form. Many people ask if a trust should send a 1099 to someone who got money from the trust – the answer is no for distributions (the correct form is a K-1). The only time a trust might issue a 1099 to an individual is if that person was being paid for services by the trust (more on that soon).
• High Tax Rates: One quirk of trusts as separate entities is that they are taxed at very compressed tax brackets. It takes only a few thousand dollars of undistributed income for a trust to hit the top tax rate (37% federal). This often incentivizes distributing income to beneficiaries in lower brackets. Either way, all reportable income still gets its own 1099 to the trust first, before either the trust or beneficiary pays the tax on it.

✅ Example: After John Doe’s death, his revocable trust becomes the Doe Family Trust, an irrevocable non-grantor trust for his children. The trust gets a new EIN and the bank updates its accounts to that EIN. In 2024, the trust earns $2,000 interest and $3,000 in dividends. The bank and brokerage issue a 1099-INT and 1099-DIV addressed to the Doe Family Trust (EIN XX-XXXXXXX). The trustee files a Form 1041 reporting the $5,000 income. If the trust document requires all income to be distributed to the children, the trustee distributes that $5,000. The trust issues each child a Schedule K-1 for their share (say $2,500 each). The children will report the income on their tax returns. The trust itself might pay little to no tax after taking a distribution deduction. No 1099s were sent to the children – only the K-1 serves to report their income portion.

To recap, here’s an overview of trust types and how 1099s are handled:

Trusts and 1099s: Who Sends What to Whom?

Now that we’ve covered how different trust types receive 1099s for income, let’s address another side of the coin: trusts as payors. Trusts can also be in a position where they need to issue a 1099 to someone else. This typically happens if the trust is engaged in some sort of business-like activity or paying for services. Here’s a breakdown of common scenarios:

• Trust Paying an Independent Contractor or Service Provider: If a trust hires someone (e.g., a gardener, attorney, or accountant) and pays them over $600 in a year for services related to the trust property, does the trust need to issue a 1099-NEC (Nonemployee Compensation)? The IRS requires businesses to issue 1099-NEC for services in the course of a trade or business. Generally, trusts and estates are not considered “trade or business” entities in the way a company is. Many trust payments, like a one-time repair on a personal residence held in trust, are considered personal or investment expenses, not business expenses – in such cases, a 1099 may not be required. However, if the trust operates a going business (say the trust owns a rental real estate enterprise with multiple properties), it’s safer to treat it as a business for 1099 purposes.
  • Example: The Doe Family Trust owns a small apartment building and pays a plumber $1,000 for repairs. The trust, using its EIN, could issue a Form 1099-NEC to the plumber since this looks like a business activity (rental operations). If the trust was just holding a personal family home, that might be viewed as a personal payment (no 1099 needed).
• Trustee Fees: Many trusts pay compensation to their trustees for managing the trust. Should a trust issue a 1099 for these trustee fees? The answer can depend on whether the trustee is engaged in a trade or business of being a trustee. If the trustee is a professional (like a lawyer or corporate trust company) regularly offering trustee services, then that trustee is effectively a business service provider – the trust would issue a 1099-NEC for fees over $600. On the other hand, if Grandma is the trustee for a family trust and not in the business of being a trustee, some tax advisers say no 1099 is required (because Grandma isn’t running a business, and the trust isn’t either). To be safe, some trusts still issue a 1099 to any paid trustee to report the income. There’s no harm in reporting it, and the trustee will report the fee as income regardless.
  • Note: If the trustee is a corporate entity (e.g. a bank trust department), 1099s for services are generally not required to be issued to corporations (except for attorneys). So a trust paying a bank trustee usually wouldn’t send a 1099 to the bank.
• Rent Paid to a Trust: Often, businesses or tenants who rent property from a trust wonder who to issue the 1099-MISC (for rent) to. If the trust is the landlord and has an EIN, the tenant (if obligated to issue a 1099, like a business tenant) should issue the 1099-MISC to the trust’s name and EIN. If it’s a revocable trust without an EIN, the 1099-MISC would be directed to the grantor’s name/SSN (since that’s the reportable owner). In either case, the trust or grantor will report the rental income on the appropriate tax return.
• Interest Paid by a Trust: If a trust borrows money or has an obligation where it pays interest (imagine a trust-owned mortgage or a loan from an individual to the trust), and it pays more than $10 of interest to the lender, the trust should issue a 1099-INT to that lender. Again, whether the trust actually must do this might hinge on the “trade or business” classification, but it’s good practice to issue it to avoid any issues for the recipient in reporting interest income.

In summary, trusts generally receive 1099 forms for income they earn, just like any person or company would, but they rarely need to issue 1099s except in business contexts. And when trusts do issue 1099s, it’s under their EIN (if they have one) just as any other payer would.

Trusts Owning LLCs, Corporations, or Partnerships (and 1099 implications)

Trusts often hold ownership in other entities – for example, a family trust might own an LLC that holds rental property, or be a shareholder of a family corporation, or a partner in a partnership. These situations can affect what forms are used to report income:

• Single-Member LLCs Owned by a Trust: A single-member LLC (SMLLC) is typically a “disregarded entity” for tax, meaning its income is reported under its owner. If a revocable trust (grantor trust) is the sole owner, the LLC’s income is ultimately the grantor’s income. If an irrevocable non-grantor trust is the sole owner, the LLC’s income is reported on the trust’s return. Importantly, if the SMLLC has its own EIN and is doing business, any 1099s related to that business might be issued to the LLC’s name and EIN – but since the LLC doesn’t file a separate return, those amounts must flow to the trust or grantor. To avoid confusion, many times the disregarded LLC will use the trust’s EIN or the grantor’s SSN for tax docs. Key point: For tax purposes, the IRS looks through a disregarded LLC to the trust. If you’re issuing a 1099 to a disregarded LLC that’s owned by a trust, ideally use the owner’s (trust or grantor’s) TIN to match IRS records.
  • Example: Smith Family Trust (an irrevocable non-grantor trust with EIN 11-1111111) owns 100% of Smith Rentals LLC. The LLC, as a disregarded entity, uses the trust’s EIN for tax reporting. A vendor paid by the LLC would get a 1099-NEC showing the Smith Family Trust’s EIN (since the trust is the real taxpayer). All the LLC income gets reported on the trust’s Form 1041.
• Trusts as Partners in Partnerships: If a trust is a partner in a partnership or multi-member LLC, that partnership will issue a Schedule K-1 to the trust for its share of income, not a 1099. Partnerships and S-corporations don’t use 1099s to report owners’ share of profits; they use K-1 forms. The trust (or grantor) then reports the K-1 income. So, if a family trust is a limited partner in a business, expect a K-1 to the trust’s EIN (if it’s separate) or to the grantor (if revocable). The only 1099s that might come into play is if the partnership paid the trust interest or rent outside of profit distribution, but usually profits are handled via K-1.
  • Example: The Doe Family Trust owns a 30% interest in ABC Investment Partnership. The partnership earns income and at year-end sends a K-1 to the Doe Family Trust showing its share of income. The trust uses that K-1 to file its taxes (or passes it to the grantor if appropriate). The partnership does not issue a 1099 to the trust for the partnership income.
• Trusts as Shareholders of Corporations: If a trust owns stock in a C-corporation, any dividends paid will be reported on a 1099-DIV to the trust (or grantor). If the trust sells stock, the broker issues a 1099-B to the trust for proceeds of sales. On the other hand, if a trust is a shareholder in an S-corporation (which is a pass-through entity), the S-corp will issue a K-1 to the trust for income, much like a partnership. Note that only certain trusts are eligible S-corp shareholders (grantor trusts, certain testamentary trusts, or “ESBTs” – Electing Small Business Trusts – in which case the trust pays tax on S-corp income separately).
  • Example: A revocable trust (grantor trust) owns shares of Apple. Apple sends a 1099-DIV to the trust’s name but under the grantor’s SSN at year-end for any dividends. The grantor reports those dividends on 1040. Meanwhile, another trust owns shares of a private S-Corp. That trust gets a K-1 each year from the S-Corp with its share of income or loss. No 1099-DIV since S-corps don’t issue dividends in the traditional sense.
• LLC or Corporation owned by Trust paying the Trust: Be mindful that if an LLC or corporation owned by a trust distributes money to the trust, the character of that distribution matters. An LLC (partnership) distribution doesn’t get a 1099; it’s part of the K-1 accounting. A corporation’s dividend or liquidation distribution may have a 1099-DIV if applicable. But if a closely-held corporation (even if owned by a trust) pays a salary or fee to the trust or trustee, that might involve a 1099-NEC (though typically they’d pay an individual or vendor, not the trust itself).

Let’s summarize some common scenarios with a quick reference:

When does a trust receive a 1099?

When does a trust need to issue a 1099 to someone else?

Federal Law on Trust Income Reporting ⚖️

Under federal tax law, trusts are governed by specific IRS rules (primarily in the Internal Revenue Code §§ 641-683 for income taxation of trusts, and §671-678 for grantor trusts). Here are key federal law points to know regarding trusts and 1099 forms:

• Information Reporting Requirements (1099s): The IRS requires any person or entity (including trusts) that makes certain types of payments to report them. For instance, interest of $10 or more paid to any taxpayer must be reported on Form 1099-INT, and payments for services over $600 in the course of business must be reported on Form 1099-NEC (or 1099-MISC for rent, etc.). These rules apply to trusts just as they apply to individuals or companies. So a bank must issue a 1099-INT to a trust that earned interest above $10. Likewise, if a trust, acting as an entity engaged in business, pays a contractor $1,000, technically it should issue a 1099-NEC. Failure to comply can lead to penalties.
• Grantor Trust Rules (IRS Regulations): The IRS regulations allow a grantor trust to use the grantor’s TIN (SSN) for accounts to simplify reporting. In fact, a wholly-owned grantor trust is not required to get an EIN at all while the grantor is alive. Many trustees of revocable trusts will use the grantor’s social security number when dealing with banks and payors so that the 1099s never even mention the trust. This avoids any potential IRS mismatches between the name and TIN. For example, Treasury Reg. §1.671-4 permits trustees to furnish payors with the grantor’s name and SSN as the payee, even if the account is titled in the name of the trust. This is why you might not see your living trust’s name on a 1099 – and that’s perfectly fine legally.
• Trust Tax Returns (Form 1041): An irrevocable trust that is not a grantor trust must file an IRS Form 1041 if it has gross income of $600 or more (or any taxable income) in a year. On that return, it will list income as shown on any 1099s received (interest, dividends, etc.). The trust then indicates how much income is distributed to beneficiaries (Schedule B of Form 1041) and issues Schedule K-1 forms to those beneficiaries for that amount. The federal law thus ensures income from 1099s gets taxed either at the trust level or by someone (grantor or beneficiary).
• No Double Taxation: One might wonder, if a trust gets a 1099 and then passes income to a beneficiary who pays tax, is the trust also taxed? Federal law prevents double taxation with the distribution deduction mechanism. Essentially, the trust reports all income (from 1099s and other sources) on Form 1041, but then deducts the portion that goes to beneficiaries, shifting the tax to them via K-1. The only time income “stays” on the trust’s tax bill is if it’s not distributed by year-end (or a little after). So, the 1099 is just an information report – who ultimately pays the tax on that amount is determined by trust law and the timing of distributions.
• Capital Gains and 1099-B: A quick note on capital gains: brokers issue Form 1099-B for proceeds from sales of stocks, bonds, etc., to the owner of the account (trust or individual). In many trusts, capital gains are considered part of principal, not income, and often taxed to the trust even if income is all distributed. Unless the trust deed or state law says otherwise, capital gain might not be passed out to beneficiaries even if the 1099-B came to the trust. Federal tax law is flexible on this if the trustee has authority to treat gains as distributable. But generally, ordinary income (interest/dividends) is distributed first.
• Special Trusts: Certain trusts have unique tax treatment under federal law (for example, charitable remainder trusts, qualified disability trusts, grantor retained annuity trusts, etc.). These may have their own reporting quirks. For instance, a charitable remainder trust files a Form 5227, not a 1041, and beneficiaries get a special character breakdown of distributions (not quite a K-1 or 1099). While these details are beyond the scope of a general overview, the point is federal law provides the framework for every trust’s taxation and information reporting requirements. In all cases, if the trust earns reportable income, someone will get a 1099 for it – be it the trust, the grantor, or a beneficiary’s K-1 for passed-through income.

State-Specific Variations in Trust Taxation 📍

While federal law governs how trusts and 1099s work for IRS purposes, state tax laws can differ on who gets taxed on trust income and how trusts must report. Notably, the requirement to issue or receive a 1099 is generally a federal matter, but states have varying rules on trust income taxation that could indirectly affect trust reporting. Here are some notable state-specific variations:

• State Income Tax on Trusts: Each state can set its own rules for when a trust is considered a resident trust subject to that state’s income tax. For example, California taxes a trust’s income if the trust has a California resident trustee or a non-contingent beneficiary in California. So a trust administered in CA will pay CA state tax on its income (and file CA Form 541) even if the trust received the same 1099s that were used for federal taxes. California doesn’t have separate 1099 requirements beyond the federal ones, but it will expect its share of tax if the trust or beneficiaries are connected to CA. On the other hand, Florida and Texas have no state income tax – a trust located there (with no other state ties) wouldn’t owe any state tax on its 1099-reported income.
• Trust Residency and Grantor’s Home State: Some states, like New York, define a “resident trust” based on the grantor’s state of residence when the trust became irrevocable. New York resident trusts are taxed by NY on all their income (with some exceptions if there’s no NY trustee, assets, or income). So if a New York resident created an irrevocable trust, that trust might have to file a NY fiduciary return and pay NY tax on income reported on those 1099s – unless it qualifies for an exemption. Pennsylvania is another example: PA doesn’t always follow federal grantor trust rules; in certain cases, PA might tax the trust’s income even if it’s a grantor trust federally. It’s important to check each state’s approach.
• States and Beneficiary Taxation: Some states attempt to tax trust income if the beneficiaries reside in that state, even if the trust itself is elsewhere. This led to notable court cases. In 2019, the U.S. Supreme Court (North Carolina Dept. of Revenue v. Kaestner) ruled that NC couldn’t tax a trust solely because a beneficiary lived there, when the beneficiary hadn’t actually received any distributions. Similarly, some states like New Jersey and California have specific rules for taxing accumulating trusts when beneficiaries are in-state. The takeaway for 1099s: a trust might get a 1099 for income, file a federal return, but then also have to allocate that income across multiple state tax returns if trustees or beneficiaries are in different states.
• State Filing Requirements: If a trust needs to pay state tax, usually it files a state fiduciary income tax return (often analogous to the federal 1041). For instance, a trust in Illinois will file IL-1041. These state forms will typically attach copies of federal 1099s or federal K-1s as support. Some states have estimated tax requirements for trusts, which may entail state-specific payment vouchers but not additional 1099 forms.
• No State 1099, But…: States generally do not have separate “state 1099” forms; they rely on the federal 1099 information (which the IRS often shares with state tax agencies). However, states might have additional reporting in other contexts – for example, state estate tax filings might list trust income or funding, and some states require trustees to report trust existence to a state registry or court in certain cases. These are more legal administrative requirements than tax reporting.
• Trust Income Accumulation in Tax-Friendly States: Because of the complexity and high state taxes in places like NY or CA, some families set up trusts in states like Delaware, Nevada, or Alaska, which have no state income tax on trust income. A properly structured trust in Delaware, for instance, can accumulate income without any state tax, meaning only the federal 1099 and 1041 process applies. This is a common strategy for “dynasty trusts” or asset protection trusts. The trust still receives 1099s for its income, but only federal tax is due. If that trust later distributes to a beneficiary in a high-tax state, that beneficiary might then owe state tax on the distribution in their home state.
• Community Property States: In community property states (like California, Texas, Arizona, etc.), a revocable trust established by a married couple might be treated slightly differently for state income splitting, but it doesn’t change 1099 issuance. Any income is still reported under the couple’s SSNs (usually one spouse’s SSN). The community property aspect just means each spouse can report half the income on their separate returns if filing separately, but again, the 1099 doesn’t get split; it will typically use one primary SSN.

In short, state differences won’t change whether a trust gets a 1099 – that’s always driven by the federal rules of who the taxpayer is – but state laws will determine who ultimately pays tax on that income. Always be sure to consider the state where the trust is administered, where the grantor lived, and where the beneficiaries live, to know the full tax picture.

Pro Tip: If you are a trustee, always obtain an EIN for an irrevocable trust promptly (unless it’s a grantor trust using the grantor’s SSN). Notify all payors (banks, brokers, etc.) of the correct taxpayer identification for the trust. This ensures 1099s are issued correctly and prevents mismatches. For revocable trusts, using the grantor’s SSN from the start will make life easier – you can even title accounts as “John Smith, Trustee of the Smith Trust (SSN xxx-xx-xxxx)” so that the 1099 aligns with John’s 1040. Upon the grantor’s death (or trust becoming irrevocable), update the TIN with financial institutions to the new EIN to ensure future 1099s report under the trust’s own identity.

FAQs: Yes/No Answers to Common Questions

Do revocable living trusts get 1099 forms in their own name? – No. A revocable living trust uses the grantor’s social security number, so banks and payors issue 1099s to the grantor (as if the trust and grantor are one).

After the grantor dies, does the trust start getting 1099s? – Yes. Once a revocable trust becomes an irrevocable trust with its own EIN (after the grantor’s death), income paid to the trust will generate 1099s to the trust going forward.

Do irrevocable trusts need an EIN for 1099 reporting? – Yes. An irrevocable non-grantor trust must have its own EIN. All payors should issue 1099s to the trust’s name/EIN for income it earns, since it’s a separate taxpayer.

Does a trust issue a 1099 to beneficiaries for distributions? – No. Trust distributions are reported on Schedule K-1 (from Form 1041), not on 1099 forms. Beneficiaries won’t get a 1099 for income distributions from a trust.

Should a trust send a 1099-NEC to a paid trustee? – Possibly. A professional trustee (in business) should get a 1099-NEC for fees over $600, whereas a one-time family trustee generally doesn’t require one.

Can a trust avoid taxes by not reporting a 1099? – No. You cannot avoid tax by ignoring a 1099 – the IRS gets a copy. Trust income on a 1099 must be reported by the trust, grantor, or beneficiaries.

Do family trusts pay capital gains taxes? – Yes. Capital gains earned by a trust are taxable. Either the trust pays the tax (if the gain isn’t distributed) or the gain is passed to beneficiaries who then pay the tax.

Is interest on a trust’s bank account taxable to the trust? – Yes. Interest (1099-INT) from a trust’s bank account is taxable. If revocable, the grantor reports it; if non-grantor, the trust pays tax unless it distributes that income.

Can an LLC owned by a trust use the trust’s EIN? – Yes. A single-member LLC owned by a trust can use the trust’s EIN (disregarded entity). If it’s taxed as a partnership or S/C-corp, it needs its own EIN and separate returns.