Does a trust have to file a tax return if there is no income?

No, a trust is not generally required to file a tax return if there is no income. However, even a small amount of taxable income may result in the need to file a tax return.

Not all trusts file tax returns. For example, a revocable trust does not file a tax return, regardless of the income earned. A revocable trust is one that the grantor can take back or amend at will. In addition, a grantor trust does not file a tax return. A grantor trust is a type of trust where the grantor retains certain control over the trust’s assets, meaning the trust’s income is reported on the grantor's personal tax return. In contrast, a non-grantor, irrevocable trust is treated as a separate entity for tax purposes and is typically required to file a tax return. For example, a revocable trust may become a non-grantor, irrevocable trust after the death of the grantor, causing the trust to become a separate taxable entity with its own employer identification number (EIN).

But what happens when an irrevocable, non-grantor trust has no income in a year? Does it still have to file a tax return? The short answer is “no.” If there is truly no income whatsoever, then generally no tax return is required. (An exception to this rule is when a trust beneficiary is a nonresident alien, in which case a tax return is required by 26 U.S.C. § 6012(a)(5) regardless of whether the trust has any income.)

However, even small amounts of income (including nontaxable income!) can result in a need to file a tax return. If a trust has any taxable income (gross income minus deductions) at all in a year, then a tax return must be filed. Or if a trust’s gross income exceeds $600, then a tax return must be filed, regardless of how many deductions can be used. Thus, you must file a tax return if either the trust income exceeds $600 or if there is any taxable income at all.