Form 1041: U.S. Income Tax Return for Estates and Trusts

Daniel Liberto is a journalist with over 10 years of experience working with publications such as the Financial Times, The Independent, and Investors Chronicle.

Lea Uradu, J.D. is a Maryland State Registered Tax Preparer, State Certified Notary Public, Certified VITA Tax Preparer, IRS Annual Filing Season Program Participant, and Tax Writer.

Vikki Velasquez is a researcher and writer who has managed, coordinated, and directed various community and nonprofit organizations. She has conducted in-depth research on social and economic issues and has also revised and edited educational materials for the Greater Richmond area.

What Is Form 1041: U.S. Income Tax Return for Estates and Trusts?

Form 1041 is an Internal Revenue Service (IRS) income tax return filed by the trustee or representative of a decedent's estate, trust, or bankruptcy estate.

Derived from Section 1041 of the Internal Revenue Code (IRC), Form 1041 is used to declare any taxable income that an estate or trust generated after the decedent passed away and before designated assets were transferred to beneficiaries.

The form is due by the 15th day of the fourth month after the estate's or trust's tax year ends.

Key Takeaways

• Form 1041 is a tax return filed by estates or trusts that generated income after the decedent passed away and before the designated assets were transferred to beneficiaries.
• The executor, trustee, or personal representative of the estate or trust is responsible for filing Form 1041.
• Form 1041 does not need to be filed if the estate or trust generated an annual gross income (AGI) less than $600 unless any beneficiary is a nonresident alien.
• Certain income or deductions may require a complementary form or schedule.
• Form 1041 is due by the fifteenth day of the fourth month after the close of the tax year and can be sent electronically or by mail.

Understanding Form 1041

Form 1041 details income earned by an estate or trust from the time of the decedent's death until the assets are distributed to beneficiaries. During this period, income can be generated from stocks, bonds, mutual funds, savings accounts, rented property, and a final paycheck.

As with other income tax returns, deductions, and capital losses can reduce the amount of money owed. Any income earned before the date of death is reported on the decedent's final tax return, a separate document filed by the estate executor. Assets passed straight to the beneficiary and not held by the estate or trust are not included on Form 1041.

Form 1041 applies to federal taxation and relates to Section 1041 of the Internal Revenue Code. Some estates and trusts may also have to pay income taxes at the state level.

How to File Form 1041

The executor, trustee, or personal representative of the estate or trust is responsible for filing Form 1041 if the assets they oversee produce an annual gross income (AGI) greater than $600. In addition, if any of the beneficiaries is a nonresident alien, a return must be filed even if no income was generated.

Form 1041 consists of three pages that request basic information about the estate or trust. It details income and deductions, and then provides a section where filers calculate a tax bill using the Schedule G worksheet from the second page.

Disclosures are included for charitable donations and the distribution of income to beneficiaries. This is followed by an "Other Information" section.

Identify Yourself

First, you’ll need to identify yourself and provide the name of the estate or trust and its address. The deceased and their estate are separate taxable entities. That means both the taxpayer and the estate or trust need taxpayer identification numbers (TIN).

Therefore, to file Form 1041, you must obtain for the estate or trust an employer identification number (EIN), a unique nine-digit number assigned to a business entity for tax payment purposes. You can apply for it online at IRS.gov/EIN or by mailing Form SS-4: Application for Employer Identification Number.

Income

Income earned by the estate or trust is reported on lines 1 to 9 of the 1041 tax return. Each source of income, such as interest, dividends, capital gains, rents, and royalties, appears in a separate row. And for some types of income, you’ll attach an extra form.

For example, some income or deductions require the filing of an additional complementary form or “schedule.” Schedules A (Charitable Deduction), B (Income Distribution Deduction), and G (Tax Computation and Payments) are part of Form 1041.

Deductions

The estate or trust is permitted to subtract certain expenses from its gross income to reduce the amount that is subject to taxation. Form 1041 filers must disclose these deductions on lines 10 through 22.

Money transferred to beneficiaries can be deducted. Whenever a beneficiary receives a distribution from the estate or trust, they should be issued a Schedule K-1 detailing the amount, which they will then report as income on their tax return.

The person responsible for filing Form 1041 will total these K-1s and detail everything in Schedule B, which can be found on page 2 of Form 1041.

Tax and Payments

After inputting income and deductions, you’ll use the Schedule G worksheet for the Tax and Payments section of the return and, as with the rest of the form, carefully consult the IRS’ line-by-line instructions to avoid making errors.

You can receive Form 1041 by mail or obtain it online from the IRS website. Once you have it open on your screen, you can fill it out and save it on your computer, or print it out and complete it by hand.

Special Considerations When Filing Form 1041

According to the IRS, estates or trusts must file Form 1041 by “the fifteenth day of the fourth month after the close of the trust's or estate’s tax year.” Usually, the calendar year starts on the day of the death and ends on Dec. 31, and the Form 1041 due date of April 15 of the following year.

The executor or trustee can use a fiscal year (FY) instead, and the tax year ends on the last day of the month before the first anniversary of death. If the decedent passed away June 1, the FY would run until May 31 of the following year, with Form 1041 due Sept. 15 or the next business day.

Note

Use Form 7004 to apply for a five-month extension to file Form 1041.

E-File Form 1041

Qualified fiduciaries are able to file Form 1041 and related schedules over the internet but only after they have been granted e-file provider status—a process that can take four to six weeks to complete.

Mail Form 1041

You can mail Form 1041 and its related schedules, rather than e-file. Be sure to use the correct address, which depends on where the estate or trust is located and whether the filer sends a check or money order for any taxes due.

To determine the address, consult the IRS website. If Form 1041 is e-filed, you cannot send associated schedules by mail.

Who Has to File Form 1041?

The executor, trustee, or personal representative of an estate or trust that generates more than $600 in annual gross income (AGI) after the decedent passes away and before the assets are distributed to their beneficiaries is required to file Form 1041. Alternatively, if any of the beneficiaries is a nonresident alien, the form must be filed regardless of whether any income was produced.

Who Pays the Tax on Form 1041?

The estate or trust holding the assets that are generating an income.

Are Funeral Expenses Deductible on Form 1041?

No. According to the IRS, funeral expenses are only deductible on Form 706, a separate tax return used by an executor of a decedent’s estate to calculate the estate tax owed and to compute the generation-skipping transfer (GST) tax.

The Bottom Line

Form 1041 is an IRS income tax return filed by the trustee or representative of a decedent's estate or trust. The form consists of three pages and requires basic information about the estate or trust. It also requires details about its income and deductions.

The IRS requires estates or trusts to file Form 1041 by the fifteenth day of the fourth month after the close of the tax year.

1. Internal Revenue Service. "File an Estate Tax Income Tax Return."
2. Internal Revenue Service. "Instructions for Form 1041 and Schedules A, B, G, J, and K-1, U.S. Income Tax Return for Estates and Trusts," Pages 4-5.
3. Internal Revenue Service. "Form 1041, U.S. Income Tax Return for Estates and Trusts."
4. Internal Revenue Service. "How To Apply for an EIN."
5. Internal Revenue Service. "Instructions for Form 1041 and Schedules A, B, G, J, and K-1, U.S. Income Tax Return for Estates and Trusts," Page 18.
6. Internal Revenue Service. "Form 1041, U.S. Income Tax Return for Estates and Trusts," Page 1.
7. Internal Revenue Service. "Instructions for Form 1041 and Schedules A, B, G, J, and K-1, U.S. Income Tax Return for Estates and Trusts," Pages 28-31.
8. Internal Revenue Service. "Instructions for Form 1041 and Schedules A, B, G, J, and K-1, U.S. Income Tax Return for Estates and Trusts," Page 41.
9. Internal Revenue Service. "Form 1041, U.S. Income Tax Return for Estates and Trusts," Page 2.
10. Internal Revenue Service. "Instructions for Form 1041 and Schedules A, B, G, J, and K-1, U.S. Income Tax Return for Estates and Trusts," Pages 31-36.
11. Internal Revenue Service. "Instructions for Form 1041 and Schedules A, B, G, J, and K-1, U.S. Income Tax Return for Estates and Trusts," Page 8.
12. Internal Revenue Service. "Estates and Trusts."
13. Internal Revenue Service. "Instructions for Form 1041 and Schedules A, B, G, J, and K-1, U.S. Income Tax Return for Estates and Trusts," Page 10.
14. Internal Revenue Service. "Instructions for Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return," Pages 1, 35-36.
15. Internal Revenue Service. "Instructions for Form 1041 and Schedules A, B, G, J, and K-1, U.S. Income Tax Return for Estates and Trusts," Page 25.

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IRS Form 1310: Statement of Person Claiming Refund Due a Deceased Taxpayer is used to request a federal tax refund on behalf of a deceased taxpayer.

IRS Schedule K-1 is a document used to describe the incomes, losses, and dividends of a business's partners or an S corporation's shareholders.

Decedent is a legal term used by tax accountants, lawyers, and estate planners to refer to a deceased person. Decedents may continue to have financial obligations.

Form 1065: U.S. Return of Partnership Income is a tax document issued by the IRS used to declare the profits, losses, deductions, and credits of a business partnership.

Income in respect of a decedent (IRD) is money owed to a person before they passed away (e.g., wages). The person or entity that inherits the income pays the taxes.

Estate executors use IRS Form 706: United States Estate (and Generation-Skipping Transfer) Tax Return to calculate estate tax and compute the generation-skipping transfer (GST) tax.

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