Grantor Trusts

A grantor trust is not considered a separate taxable entity. The grantor must include taxable income earned by the trust on their federal and Minnesota Individual Income Tax returns.

The grantor trust must use the same filing method for Minnesota as was filed federally.

If Filing Minnesota Form M2

If the grantor trust is filing Minnesota Form M2, they must:

• Complete the demographic information for the trust on Form M2. Do not record any dollar amounts for the grantor trust on the form itself.
• Attach a copy of the federal Form 1041, U.S. Income Tax Return for Estates and Trusts, and a statement showing trust income, credits and deductions that are attributable to the grantor.
• Attach a separate statement showing the trust’s Minnesota income adjustments that are attributable to the grantor. If the grantor is a nonresident, indicate their Minnesota-source income from the trust.
• Include the grantor’s name, address, and Social Security Number or Minnesota Tax ID Number on all attachments.

Note: If you treat only part of the trust as a grantor trust, report the income and deductions for the non-grantor portion on Minnesota Form M2 and federal Form 1041.

Any amounts taxable directly to the grantor portion must be reported separately.