When Is a Tax Return Due for a Trust When a Person Dies?

When a grantor -- a living-trust creator -- dies, the trust becomes irrevocable. An irrevocable trust is an independent taxpayer in the eyes of the IRS, required to file its own tax return. Responsibility for completing the paperwork falls to the trustee appointed by the grantor. If you're the trustee, you may be able to take almost a year to file.

Deadlines

As trustee, you have a lot of flexibility in when to submit the first tax return. The first step is to pick a closing date for the trust's tax year. Suppose the grantor dies July 14. Some trusts must choose a calendar tax year ending Dec. 31. Other trusts can use a fiscal year with an ending date as far ahead as 11 months from the death. In this case, that would be June 14 of the following year. The instructions for Form 1041 explain which trusts have that option.

Forms

Once you set the closing date, you have 3.5 months after that to turn in the return. If you pick Dec. 31, for instance, that gives you until April 15. The form to file is 1041, the income-tax return for trusts and estates. Whatever date you set for the end of the first tax year, that will be the date you use for future tax returns too, assuming the trust is set up to last a while.

Election Period

If the trust was revocable during the grantor's lifetime, you and his executor can submit one tax return instead of two. If you and the executor both agree, she can file a 1041 for the estate that includes the trust's income. You provide the trust's financials, but the executor deals with the IRS. To take this option, you have to file Form 8855 before the executor files the estate's first 1041. The decision is irreversible.

Estimated Tax

Even if you postpone filing the 1041 until next year, estimated tax payments may be due a lot sooner. If you think the trust's going to owe $1,000 in income tax for the year, the trust may have to pay estimated tax. Estimated tax payments are due quarterly: in April, June, September and January of the following year, though the schedule obviously depends on when the grantor dies. The IRS instructions for 1041 spell out which trusts have to make estimated payments.

About the Author

A graduate of Oberlin College, Fraser Sherman began writing in 1981. Since then he's researched and written newspaper and magazine stories on city government, court cases, business, real estate and finance, the uses of new technologies and film history. Sherman has worked for more than a decade as a newspaper reporter, and his magazine articles have been published in "Newsweek," "Air & Space," "Backpacker" and "Boys' Life." Sherman is also the author of three film reference books, with a fourth currently under way.

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