do trust funds count as income
An exemption trust is created when one person dies and their living trust splits assets based on the estate tax exemption amount. While it is required to file a tax return for an irrevocable trust entity, the income and corresponding tax from this type of trust is passed through to the beneficiary. A K-1 income tax reporting form is generated by the original trust, sent to the IRS by the trust, and given to the beneficiary for filing with their taxes.