With her near-sightedness, and those tremulous fingers of hers, at once inflexible and delicate, she could not be a seamstress; although her sampler, of fifty years gone by, exhibited some of the most recondite specimens of ornamental needlework.
State taxes on family trusts vary, but federal laws require family trusts to pay taxes on income it keeps but not on any that is distributed. A trust that earns $50,000 and distributes it all to trust beneficiaries pays no income tax. The beneficiaries pay income taxes on funds given to them.
The complexity of trust taxation arises because of several factors: 1  The trust is a taxable entity. 2  Beneficiaries usually have to pay tax on the income that they receive from the trust. 3  Trusts are not subject to double taxation, so any taxable income distributed to the beneficiaries is deductible by the trust.