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Old 01-30-2014, 03:55 PM
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Tax owed under $1

I am a trustee who has completed a 2013 form 1041 for a complex trust. The total tax due (line 27) is $0.19 (nineteen cents). Do I need to pay this? The instructions for form 1040 say that you do not have to pay if the amount owed is under $1. However, the instructions for form 1041 contain no such language. I am using the 2012 form 1041 instructions, because the IRS has not yet released the 2013 version, but I am assuming that for the purpose of this question there will be no change from last year to this year.

I called the IRS, and after talking with three different people and being on hold for 45 minutes, I was basically told that the IRS cannot answer this question. I was advised to hire a CPA or tax attorney, so that my high priced hired help could also be told that the IRS cannot answer this question. Very frustrating.

Yes, it's only nineteen cents, but if I don't have to cut and mail a check, I would rather not do that. I am fairly certain that I need to file the return, because there is taxable income, but hopefully I can file electronically.



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Old 01-30-2014, 04:34 PM
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Quote:
Originally Posted by deltacharlie View Post
I am a trustee who has completed a 2013 form 1041 for a complex trust. The total tax due (line 27) is $0.19 (nineteen cents). Do I need to pay this? The instructions for form 1040 say that you do not have to pay if the amount owed is under $1. However, the instructions for form 1041 contain no such language. I am using the 2012 form 1041 instructions, because the IRS has not yet released the 2013 version, but I am assuming that for the purpose of this question there will be no change from last year to this year.

I called the IRS, and after talking with three different people and being on hold for 45 minutes, I was basically told that the IRS cannot answer this question. I was advised to hire a CPA or tax attorney, so that my high priced hired help could also be told that the IRS cannot answer this question. Very frustrating.

Yes, it's only nineteen cents, but if I don't have to cut and mail a check, I would rather not do that. I am fairly certain that I need to file the return, because there is taxable income, but hopefully I can file electronically.
The IRS discards any debts of less than $1. Nor do they pay refunds of less than $1. Net result, no impact.



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Old 01-30-2014, 05:03 PM
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Thank you. Not that I don't trust you or anything, but where can I find this in writing, from the IRS, that either specifically applies to a form 1041 amount due or is a general IRS policy across all types of returns?

Also, am I correct in thinking that I will have to file the return because there is taxable income?



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Old 01-30-2014, 06:01 PM
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A trust may be required to pay tax to IRS if it has earned income and has made no distributions to the beneficiaries.just like a reg individual,
Generally, . The trust return will affect the personal return because it generates a form called a K-1 that will show income that will need to be included on the individual’s return


The irc states, QUOTE,”To save interest and penalties,
pay your taxes in full by April
15, 2014. You do not have to
pay if line 76 is under $1.
Include any estimated tax.

So, they will most likely take your few cents out if it is actually a few dollars. The Feds consider it a wash if the amount owed or due is under a dollar. They don't collect or hold you responsible for amounts that round to less than a dollar. So if you owe them a few cents, you actually don't owe them anything.

http://www.irs.gov/pub/irs-pdf/i1040.pdf



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Old 01-30-2014, 06:17 PM
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There is no K-1 because all 2013 income went to the trust. There is no trust income to the beneficiary and therefore the trust has no impact on the beneficiary's personal return.

The language you quoted and link you provided is for the form 1040 instructions. I'm looking for something specific to the form 1041 or a general IRS policy that amounts due of less than $1 do not need to be paid.



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Old 01-30-2014, 06:27 PM
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A trust is a separate legal entity for income tax purposes, and thus must file its own tax forms. A trust that is required to distribute all its income currently is considered a simple trust; otherwise the trust is a complex trust.
A trust figures its income and deductions much in the same way that an individual figures his or her income for tax purposes with one major difference. A trust is allowed a deduction for income distributed to beneficiaries. The income distribution deduction is figured by completing Sch B of Form 1041. The beneficiary, not the trust, pays the income tax on the taxable amount of the distributions.I guess yu can contact a n IRSEA/a CPA in your local area for more info indetail



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Old 01-30-2014, 07:04 PM
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Originally Posted by Wnhough View Post
A trust is a separate legal entity for income tax purposes, and thus must file its own tax forms. A trust that is required to distribute all its income currently is considered a simple trust; otherwise the trust is a complex trust.
A trust figures its income and deductions much in the same way that an individual figures his or her income for tax purposes with one major difference. A trust is allowed a deduction for income distributed to beneficiaries. The income distribution deduction is figured by completing Sch B of Form 1041. The beneficiary, not the trust, pays the income tax on the taxable amount of the distributions.I guess yu can contact a n IRSEA/a CPA in your local area for more info indetail
Yes, I understand all that, and none of this addresses my original, simple (so I thought) question. As I mentioned in my first post, this is a complex trust. It is not required to distribute its income currently. There was no income distributed to the beneficiary in 2013, and therefore no K-1 was or will be issued and there is no schedule B income distribution deduction on the trust's form 1041.

You have very graciously responded to my inquiries and told me that an amount owed of less than $1 does not need to be paid. My follow-up question was simply to ask if this information can be found in any IRS writing, other than the form 1040 instructions, which logically only applies to form 1040 returns.

I guess I'll just file the return (hopefully electronically) without payment, and see if the IRS asks where the nineteen cents is.



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