What are the consequences of adding income from a trust directly on 1040, without filing a trust return? The trust has its own Fed ID.

[laval650]

The trust is a brokerage account with dividends, interest and capital gains.

[itonewbie · Accepted solution]

If it's a grantor trust, the grantor is also the trustee, and the payor has the grantor's W-9 on file to issue 1099 with his/her name and SSN, there should be no problem.  Otherwise, as the IRMN says, Uncle Sam will probably issue a notice as they'd be expecting a 1041 from the trust.

If these conditions are met except the brokerage does not have the grantor's W-9, you may like to suggest your client work with the brokerage to make the change to simplify the reporting going forward.

[IRonMaN]

Getting a notice somewhere down the line from the IRS looking for failure to file penalties.