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Julie Garber

2014 Estate and Trust Income Tax Brackets

By November 12, 2013

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The IRS has released the inflation-adjusted income tax brackets for 2014. Below are the income tax brackets that will apply to estates and trusts in 2014, which includes the top 39.6% income tax bracket that was introduced in 2013 by the American Taxpayer Relief Act:

If taxable income is:      The tax is:

Not over $2,500          15% of the taxable income

Over $2,500 but          $375.00 plus 25% of
not over $5,800           the excess over $2,500

Over $5,800 but          $1,200 plus 28% of
not over $8,900           the excess over $5,800

Over $8,900 but          $2,068 plus 33% of
not over $12,150         the excess over $8,900

Over $12,150              $3,140.50 plus 39.6% of
                                    the excess over $12,150

November 19, 2013 at 11:31 am
(1) Anne says:

Hi Julie:

Trusts have high tax income !!!
My question is:

What type of taxes would a regular FDIC Bank Account (savings; checking; CDs; etc. ) have ?

Wouldn’t I save money if I dissolved the Trust to an FDIC Bank Acct.?
Anne Conn USA
Happy Thanksgiving !!!

November 20, 2013 at 7:59 pm
(2) Julie Ann Garber, Esq. says:

Hi Anne, a revocable living trust is considered a “grantor trust” for income tax purposes, so the trust itself does not pay any income taxes, all of the income is reported on the grantor’s personal income tax return. The brackets listed apply to trusts that are not taxed as grantor trusts as well as estates. Thus, if you’re asking about collapsing a revocable living trust, that won’t affect your income tax bill.

Best regards,

Julie Ann Garber, Esq.
Attorney, The Andersen Firm, A Professional Corporation
Guide to Wills & Estate Planning
About.com | Need. Know. Accomplish.

The information contained in this comment is not legal or tax advice and is not a
substitute for legal or tax advice. For legal advice, please consult with an
attorney. For tax advice, please consult with an accountant or tax attorney.

March 16, 2014 at 3:54 pm
(3) 60minuteman says:

Lets say that a trust makes 500,000/year and ALL of the income is qualified dividends. Would it still be taxed at the 39.6% rate if all the money remains in the trust?

May 4, 2014 at 8:30 pm
(4) Greg U. says:

I recently became trustee of my Mom’s separate property trust and there is a small annuity valued at about $10,000 attached to it. What tax withholding rate should I claim for both federal and state(CA.) taxes when I cash it in?

May 6, 2014 at 1:48 pm
(5) Larrybob says:

I have the same question as Greg U. We recently sold my parents home which had a reverse mortgage. We only gained around $10,000 which was put in a trust account. The idea is to split the money between myself and 2 siblings. What tax rate will the trust have to pay on this money?

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