What is the taxation of trust income?
Trust income taxation in Utah is determined by the type of trust. A “revocable trust” is one in which the person who created it (called the “grantor”) retains the right to modify or terminate it. The grantor is taxed on all income from the trust as if he or she had earned it directly. An “irrevocable trust”, on the other hand, is one that cannot be modified or terminated by the grantor. The trust itself must pay taxes on any income it receives. Trust income is taxed in the same manner as other forms of income, such as wages, investments, or property. This includes any income from interest, dividends, capital gains, rents, royalties, annuities, and property sales. Additionally, trust income may be subject to special taxation depending on the type of trust and circumstances. These rules are complex, and professional advice is recommended to determine the correct tax treatment of trust income in Utah.
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