What does 'trust income' refer to?

Trust income refers to the income generated by the assets held within a trust. This includes earnings such as dividends, interest, and other forms of income that are produced by the investments or properties owned by the trust. The trust itself does not earn income in the same way individuals do; instead, any income generated from the underlying assets is attributed to the trust, which then may distribute this income to beneficiaries according to the trust's terms.

This distinction is important in tax compliance, as trust income can differ from individual income and may be subject to different tax rules and regulations. Understanding trust income is crucial for accurately reporting and managing the tax obligations of both the trust and its beneficiaries.

Income earned through self-employment, capital gains, and rental property income pertains to individual earning scenarios and does not encompass the broader definition of trust income, which specifically relates to the income generated by the assets of a trust.