Does a trust or estate need to pay income tax? | Finance information

Question by Mike : Does a trust or estate need to pay income tax ?
I know that a trust or estate, for tax purpose, serves as a conduit tax Whereby no income tax on it. Is my understanding correct? if correct, how come the IRS has income tax rates for estates and trusts?If a trust or estate distributes its current year?s income to its beneficiaries, the trust or estate does need to pay income tax on its distribution? Best answer:
Answer by

PepsiLime
No, your understanding is not correct. If the estate value is high enough, there would be an estate tax paid by the estate, and if a trust has taxable income after deductions, so the trust has to pay income tax as well. Estates and / or trusts do have to pay taxes. There are ways to minimize or eliminate taxes on estates and / or trusts. I have included a link to estates and trusts to help you. A trust can avoid paying taxes if it passes the income and deductions through to the beneficiaries of the trust, but someone still has to pay tax on the income.

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