After researching, it was made very clear that the IRS does NOT require a separate return (1041) for trusts that are Revocable Living trusts as long as the grantor is still alive. On the state level, however, it seems logical that the same would apply but the instructions for the California FTB Form 541 seems to imply that ALL trusts must file it (no mentions of exceptions for Revocable Living ones) but I suspect this might just be a given? After all, Revocable Living trusts actually use the grantor's SSN so it would make sense to not have to file a separate form for it too. I just want to make sure I understand correctly because only the IRS clearly states the exception but the CA state forms are unclear on it. Does a Revocable Living trust have to file a California FTB Form 541 for state taxes? Thanks.
No while t by e grantors are alive. Revocable living trusts are disadvantaged entities for tax purposes and income items are reported in the grantors' returns. Good luck .
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