How to Apply for an Extension for Trusts and Estates Tax Form 1041?
The deadline for filing certain business income tax returns is approaching in just a few days, on April 15, 2023. One of these income tax returns is Form 1041. This is a widely used IRS tax form that can be intimidating to filers.
If you are required to file Form 1041 and need additional time to file this form, now is the time to consider filing an extension of time with the IRS. Contrary to misconceptions, filing a tax extension with the IRS is simple and takes very little time.
Here’s a guide to addressing your Form 1041 and filing your tax extension.
What is Form 1041?
The Form 1041 is the U.S. Income Tax Return for Estates and Trusts. According to the IRS, this form should be filed in relation to all domestic estates and trusts. This form reports a variety of information to the IRS, including the income, gains, and deductions of a decedent’s estate, domestic estate, trust, or the bankruptcy estate.
The IRS states that this applies to income that is held in trust, accumulated income, or income being held for future or currently being distributed to beneficiaries. It applies to any tax liabilities of the trust or estate and employment tax on wages paid to household employees. In addition, Net Investment Income tax must also be reported.
Who should file Form 1041?
The fiduciary or joint fiduciaries are required to file on behalf of estates and trusts in a variety of different situations. Fiduciaries of the following types of estates and trusts are required to file Form 1041.
- A Decedent’s estate with a gross income of $600 or more
- Domestic Trusts taxable under section 641
- Grantor Type Trusts
- Alaska Native Settlement Trusts
- Bankruptcy Estates
- Charitable Remainder Trusts
- Common Trust Funds
- Electing Small Business Trusts
- Pooled Income Funds
- Qualified Funeral Trusts
- Qualified Settlement Funds
- Widely Held Fixed Investment Trusts
Who is the Fiduciary?
A fiduciary is an individual or organization that acts on behalf of another person or organization. This responsible party is legally required to act in the best interest of the estate or trust that they represent. The fiduciary may also be referred to as a trustee, administrator, or executor.
When is Form 1041 due to the IRS?
The deadline to file Form 1041 is determined by the estate or trust’s fiscal year. This form is due on the 15th day of the fourth month following the end of the tax year. For estates and trusts operating on a calendar year, this date is April 15, 2023.
Which Extension Form should be filed for Form 1041?
Fiduciaries of estates and trusts should file Form 7004, this is the Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns.
The business tax extension Form 7004 must be filed by the original filing deadline of the business income tax return you wish to extend. For corporations on a calendar year, this extension must be filed with the IRS no later than April 15, 2023. After April 15, 2023, the option to file an extension is no longer available.
Another common misconception about your tax extension is that your tax payment is included in the extension, this is not true. All tax payments must be made on the original deadline, whether or not an extension is filed and approved. If the required payment is not made on time, penalties and interest could be applied to your existing balance due.
How does Form 7004 work?
The IRS doesn’t require any reason for why a fiduciary chooses to file an extension on behalf of an estate or trust.
Since it is an automatic extension, fiduciaries will be granted the extension easily and without question, provided that their 7004 contains no errors or inaccurate information.
The typical extension length that is granted is up to six months.
Provided that an extension has not already been filed for this EIN and all of the information on the Form 7004 extension application matches what the IRS has on record, your 1041 Extension will most likely be granted for up to six months.
What are the filing options for Form 7004?
You can either file form 7004 electronically or can paper file this form and mail it to the IRS. When deciding which method to use for filing this form, it is important to keep in mind that the IRS has a backlog of paper forms.
Not only is electronic filing the IRS preferred method, but this method enables you to get an instant update in your form and instant approval. This eliminates any concern about whether your form 7004 made it to the IRS or whether the extension has been approved or not.
E-filing is also more accurate and much more secure than mailing your personal information. Skip the postage this year and try e-filing your Form 7004. IRS processes your return faster and provides you with the Status instantly.
What information is needed to complete Form 7004?
Once you have the necessary information, you’ll be surprised how simple it is to complete Form 7004! Here is the information you will need to file:
- Your business type (estate, trust, etc.)
- The estate or trust’s basic information, like the name EIN, and address (remember, for approval, this information must match what the IRS has on file).
- Which tax form you are requesting an extension for.
- The start and end date of your tax year, do you operate on a calendar year?
- Your estimated tax payment.
Now that we have covered every aspect of Form 7004, are you ready to get started?
With ExpressExtension, you can easily e-file Form 7004 in minutes and receive instant IRS updates on the status of your extension. In addition to a user-friendly application designed for speedy and accurate filing, ExpressExtension has an excellent customer support team available by phone, email, and live chat to guide you during the e-filing process.
Learn more at www.ExpressExtension.com today!
