For more information on Grantor Type Trusts, refer to the IRS instructions for Form 1041, U.S. Income Tax Return for Estates and Trusts.
A trust is a grantor trust if the grantor retains certain powers or ownership benefits. This can also apply to only a portion of a trust. See Grantor Type Trust, later, for details on what makes a trust a grantor trust.
In general, a grantor trust is ignored for income tax purposes and all of the income, deductions, etc., are treated as belonging directly to the grantor. This also applies to any portion of a trust that is treated as a grantor trust.
TaxAct offers a worksheet in the 1041 Estate and Trust program to complete as a Grantor Letter. The box for Grantor Type Trust box on the Type of Entity screen must be checked in order to initiate the Grantor Letter worksheet.