An Overview of Form 1041

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August 08, 2013

It has been said numerous times, by numerous people, in numerous capacities, that the only two things certain in life are death and taxes. In the United States, residents and nonresidents enjoy another truism that is even a bit less pleasant: Taxes continue on well after someone's death has taken place. Due in large part to things like the capital gains tax, the estate tax, and any number of other state and federal taxation programs, the beneficiaries of a given estate are often required to pay some amount of tax based on the final value of that estate and how much of the estate's total worth is considered by the federal government to be earned income. Any income earned from an estate, just like income earned from a job, must be declared and fairly taxed by both state and federal sources.

For the purpose of submitting estate income to the federal government for taxation, certified public accountants must help their clients file the Internal Revenue Service's Form 1041. This name might sound quite familiar: Form 1040 is the one used by virtually all single and married tax filers who are documenting their personal income as earned from gambling winnings, occupational income, investment, and other sources not related to the inherited estate of a close friend or loved one.

Form 1041 can best be described as an estate's income tax return. The form must be filed in virtually all conditions, as the income threshold is relative low. Any estate earning more than $600 per year in payable income must file a Form 1041, and all accompanying schedules, with the federal government. The form, and all accompanying schedules, can be a bit too complex for individual filers and thus a CPA is the best way to handle such a requirement. It's worth looking at every aspect of Form 1041 to understand how to best prepare and file the document on time with the Internal Revenue Service.

Visit Lorman Education Services for all of your Tax Compliance Training needs. Checkout our upcoming tax seminars, webinars and other ondemand training programs.

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