Fiduciary Reporting

The executors of wills are considered fiduciaries because they essentially hold the assets left behind by a decadent on behalf of a beneficiary. In this respect, the IRS usually requires these fiduciaries to file a 1041 form and any applicable taxes before the final transfer of one’s estate or assets is made to their beneficiaries.

Do keep in mind that certain estates and trusts may not have to file a fiduciary return if their taxable income happens to fall below a certain limit. In this case, the executor must file a tax return if the estate made over $600 in taxable income for the year. This also applies to administrators handling trusts.

When it comes to filing, the fiduciary can opt to either file the returns based on the calendar year or fiscal year. Once this choice is made, it cannot be changed for the subsequent year that follows. If the trust or estate is set to the calendar year, the fiduciary will have to file the returns by April 15th in the year following and every subsequent April 15th.

On the other hand, if it happens to be set to the fiscal year, the fiduciary will have to file the returns on or before the 15th day of the 4th month after the end of the fiscal year. You should know that the IRS allows for one five-month extension of the deadline upon request. However, the estate or trust will still have to make sure that they pay out any estimated taxes before the original return date.