Get Form 4970 Tax On Accumulation Distribution Of Trusts Attach To Beneficiary's Tax Return

1099-R income should be reported on your tax return, but not all distributions are taxable based on the entry in Box 2a.

However, a trust or an estate may also have an income distribution deduction for distributions to beneficiaries. Report income distributions to beneficiaries and to the IRS on Schedule K-1 (Form 1041). For calendar year estates and trusts, file Form 1041 and Schedule(s) K-1 on or before April 15 of the following year.

About Form 4970, Tax on Accumulation Distribution of Trusts | Internal Revenue Service.

In an accumulation trust, the Trustee determines whether it is in the beneficiary's best interest to distribute the funds to the beneficiary and allow the funds to be taxed at the beneficiary's individual tax rate or to accumulate them in the trust and pay taxes at the trust's tax rate.

When trust beneficiaries receive distributions from the trust's principal balance, they don't have to pay taxes on this disbursement. The Internal Revenue Service (IRS) assumes this money was taxed before being placed into the trust. Gains on the trust are taxable as income to the beneficiary or the trust.

A beneficiary of certain domestic trusts (see Who Must File below) uses Form 4970 to figure the partial tax on accumulation distributions under section 667. The fiduciary notifies the beneficiary of an “accumulation distribution” by completing Part IV of Schedule J (Form 1041).

File Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., for each person to whom you have made a designated distribution or are treated as having made a distribution of $10 or more from profit-sharing or retirement plans, any individual retirement ...