INSTRUCTIONS: U.S. INCOME TAX RETURN FOR ESTATES AND TRUSTS 1041

“U.S. Income Tax Return for Estates and Trusts 1041 Step 1”

The IRS provides detailed instructions for this form in the following instructional guide: http://www.irs.gov/pub/irs-pdf/i1041.pdf. Details about the specific sections of the form are located on pages 17 through 37. The 1041 form is used by the fiduciary of a domestic decedent’s estate, trust, or bankruptcy estate in order to report the following:

· income, deductions, gains, losses, and more for the estate or trust

· income either accumulated or held for distribution in the future or currently being distributed

· any income tax liability of the estate or trust

· employment taxes on wages paid to household employees

“U.S. Income Tax Return for Estates and Trusts 1041 Step 2”

The current form has amended Section E of Form 1041. The box is now only used for the charitable trusts described in section 4947(a)(1).

“U.S. Income Tax Return for Estates and Trusts 1041 Step 3”

For tax years beginning in 2011, the requirement to file a return for bankruptcy estate only applies if the gross income is at least $9,500.

“U.S. Income Tax Return for Estates and Trusts 1041 Step 4”

As of June 24, 2011, a person filing a Chapter 7 or Chapter 11 bankruptcy estate return is now eligible for a 6-month extension instead of a 5-month extension.

“U.S. Income Tax Return for Estates and Trusts 1041 Step 5”

In 2011, qualified disability trusts can claim an exemption up to $3,700, and the exemption is no longer phased out.

“U.S. Income Tax Return for Estates and Trusts 1041 Step 6”

Consider the following reminders when completing this form:

· review a copy of the will or trust as well as amendments and codicils

· the election to deduct state and local sales taxes has been extended through the tax year of 2011

· you’re encouraged to use Form 1041-V to accompany your balance of tax due on this form, especially if your payment is made through check or money order

· if you’re filing an amended return for an NOL carryback, put “NOL Carryback” on the top of the page