Instructions for Form 1041

2025

Instructions for Form 1041

and Schedules A, B, G, J,

and K-1

U.S. Income Tax Return for Estates and Trusts

Section references are to the Internal Revenue Code unless

otherwise noted.

Contents

Page

What’s New . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Reminders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Photographs of Missing Children . . . . . . . . . . . . . . . . 2

The Taxpayer Advocate Service (TAS) Is Here To

Help You . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

How To Get Forms and Publications . . . . . . . . . . . . . . 3

General Instructions . . . . . . . . . . . . . . . . . . . . . . . . . 3

Purpose of Form . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Income Taxation of Trusts and Decedents’

Estates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Abusive Trust Arrangements . . . . . . . . . . . . . . . . . . . 3

Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Who Must File . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Electronic Filing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

When To File . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Period Covered . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Where To File . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Who Must Sign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Accounting Methods . . . . . . . . . . . . . . . . . . . . . . . . . 9

Accounting Periods . . . . . . . . . . . . . . . . . . . . . . . . . 10

Rounding Off to Whole Dollars . . . . . . . . . . . . . . . . . 10

Estimated Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Interest and Penalties . . . . . . . . . . . . . . . . . . . . . . . 11

Other Forms That May Be Required . . . . . . . . . . . . . 11

Additional Information . . . . . . . . . . . . . . . . . . . . . . . 13

Assembly and Attachments . . . . . . . . . . . . . . . . . . . 13

Special Reporting Instructions . . . . . . . . . . . . . . . . . 13

Specific Instructions . . . . . . . . . . . . . . . . . . . . . . . . 18

Name of Estate or Trust . . . . . . . . . . . . . . . . . . . . . . 18

Name and Title of Fiduciary . . . . . . . . . . . . . . . . . . . 18

Address . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

A. Type of Entity . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

B. Number of Schedules K-1 Attached . . . . . . . . . . . 19

C. Employer Identification Number . . . . . . . . . . . . . . 19

D. Date Entity Created . . . . . . . . . . . . . . . . . . . . . . . 19

E. Nonexempt Charitable and Split-Interest Trusts . . . 19

F. Initial Return, Amended Return, etc. . . . . . . . . . . . 20

G. Section 645 Election . . . . . . . . . . . . . . . . . . . . . . 21

Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Deductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Limitations on Deductions . . . . . . . . . . . . . . . . . . . . 23

Mar 5, 2026

Contents

Page

Tax and Payments . . . . . . . . . . . . . . . . . . . . . . . . . 29

Schedule A—Charitable Deduction . . . . . . . . . . . . . 30

Schedule B—Income Distribution Deduction . . . . . . . 31

Schedule G—Tax Computation and Payments . . . . . 33

Net Investment Income Tax (NIIT) . . . . . . . . . . . . . . 38

Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . 38

Schedule J (Form 1041)—Accumulation

Distribution for Certain Complex Trusts . . . . . . . . 40

Schedule K-1 (Form 1041)—Beneficiary’s Share of

Income, Deductions, Credits, etc. . . . . . . . . . . . . 43

Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

Future Developments

For the latest information about developments related to

Form 1041 and Schedules A, B, G, J, K-1 and its instructions,

such as legislation enacted after they were published, go to

IRS.gov/Form1041.

What’s New

Changes to State and Local Tax Deduction Worksheet.

We revised the State and Local Tax Deduction Worksheet.

The purpose of the revision was to resolve an issue with the

prior worksheet which may affect the deduction calculation

for certain filers with adjusted gross income of more than

$500,000. If your 2025 adjusted gross income was not more

than $500,000 the changes to the worksheet will not impact

the calculation of your state and local tax deduction.

We revised lines 4, 6, and 7 of the worksheet. We also

added new line 8. Line 8 is now the last line of the worksheet

and contains the amount of your state and local tax

deduction.

If you have previously filed your 2025 Form 1041 and used

the prior version of the State and Local Tax Deduction

Worksheet to determine your state and local tax deduction,

and doing a recalculation using the updated State and Local

Tax Deduction Worksheet results in a higher deduction, you

should file an amended 2025 Form 1041.

Due date of return. Calendar-year estates and trusts must

file Form 1041 by April 15, 2026.

Electronic payments. If you have access to U.S. banking

services or electronic payment systems, you should use

direct deposit for any refunds. The IRS recommends paying

electronically whenever possible.

Direct deposit. We have added direct deposit fields. If

there is an overpayment on line 29, enter your direct deposit

information on lines 30c, 30d, and 30e. See the instructions

for line 30b, later, for more information.

Instructions for Form 1041 (2025) Catalog Number 11372D

Department of the Treasury Internal Revenue Service www.irs.gov

Making a payment. If there is a balance due on line 28,

go to IRS.gov/Payments for information on how to make a

payment. See the instructions for line 28, later, for more

information.

Gain from the sale or exchange of qualified farmland

property to qualified farmers. P.L. 119-21, commonly

known as the One Big Beautiful Bill Act, created a new

section 1062 regarding the gain from the sale or exchange of

qualified farmland property to qualified farmers. Section 1062

allows taxpayers to elect to pay the net income tax

attributable to the gain from the sale or exchange of qualified

farmland property to qualified farmers in four equal annual

installments. This election is available for qualified sales and

exchanges in tax years beginning after July 4, 2025. For

more information, see section 1062 and new Form 1062,

Deferral of Tax on Gain From the Sale or Exchange of

Qualified Farmland Property to Qualified Farmers, when it is

available.

To report the section 1062 applicable net tax liability and

the installment due in the first tax year, two lines were added

on Form 1041. Report the full amount of section 1062

applicable net tax liability on Schedule G, Part II, line 18c.

Report the first installment due in tax year 2025 on page 1,

line 25b. For more information, see the instructions for

line 18c and line 25b, later.

Capital gains and qualified dividends. For tax year 2025,

the 20% maximum capital gains rate applies to estates and

trusts with income above $15,900. The 0% and 15% rates

apply to certain threshold amounts. The 0% rate applies to

amounts up to $3,250. The 15% rate applies to amounts over

$3,250 and up to $15,900.

Bankruptcy estate filing threshold. For tax year 2025, the

requirement to file a return for a bankruptcy estate applies

only if gross income is at least $15,750.

Qualified disability trust. For tax year 2025, a qualified

disability trust can claim an exemption of up to $5,100. This

amount is not subject to phaseout.

Section 174A. P.L. 119-21 adds new section 174A to the

Internal Revenue Code. Section 174A(a) allows taxpayers to

deduct amounts paid or incurred for domestic research and

experimental expenditures in tax years beginning after

December 31, 2024. Alternatively, under section 174A(c), a

taxpayer may elect to charge such expenditures to capital

account and amortize such expenditures ratably over a

period of not less than 60 months, beginning with the month

in which the taxpayer first realizes benefits from such

expenditures. In addition, section 70302(f) of P.L. 119-21

provides taxpayers with various transition options that may be

applied to recover unamortized amounts paid or incurred in

tax years beginning after December 31, 2021, and before

January 1, 2025, that were capitalized and amortized for

such tax years. See Rev. Proc. 2025-28 for information

regarding the transition options contained in section 70302(f)

of P.L. 119-21, as well as the procedures to follow to begin

applying either section 174A(a) or (c) for the taxpayer’s first

tax year beginning after December 31, 2024.

Reminders

Review a copy of the will or trust instrument, including any

amendments or codicils, before preparing an estate’s or

trust’s return.

Qualified Opportunity Investment. With the exception of

grantor trusts, if you held a qualified investment in a qualified

2

opportunity fund (QOF) at any time during the year, you must

file your return with Form 8997, Initial and Annual Statement

of Qualified Opportunity Fund (QOF) Investments, attached

to your return. For more information, see Form 8997 and its

instructions.

Extension of time to file. The extension of time to file an

estate (other than a bankruptcy estate) or trust return is 51/2

months.

Item A. Type of entity. On page 1 of Form 1041, item A,

taxpayers should select more than one box, when

appropriate, to reflect the type of entity.

Item F. Net operating loss (NOL) carryback. If an

amended return is filed for an NOL carryback, check the “Net

operating loss carryback” box in item F. See Amended

Return, later, for complete information.

Item G. Section 645 election. If the estate has made a

section 645 election, the executor must check item G(1) and

provide the taxpayer identification number (TIN) of the

electing trust with the highest total asset value in item G(2).

The executor must also attach a statement to Form 1041

providing the following information for each electing trust

(including the electing trust provided in item G(2)): (a) the

name of the electing trust, (b) the TIN of the electing trust,

and (c) the name and address of the trustee of the electing

trust.

Form 1041 e-filing. When e-filing Form 1041, use either

Form 8453-FE, U.S. Estate or Trust Declaration for an IRS

e-file Return; or Form 8879-F, IRS e-file Signature

Authorization for Form 1041.

Note: Form 8879-F can only be associated with a single

Form 1041. Form 8879-F can no longer be used with multiple

Forms 1041.

For more information about e-filing returns through MeF,

see Pub. 4164, Modernized e-File (MeF) Guide for Software

Developers and Transmitters.

Photographs of Missing Children

The Internal Revenue Service is a proud partner with the

National Center for Missing & Exploited Children® (NCMEC).

Photographs of missing children selected by the Center may

appear in instructions on pages that would otherwise be

blank. You can help bring these children home by looking at

the photographs and calling 1-800-THE-LOST

(1-800-843-5678) if you recognize a child.

The Taxpayer Advocate Service (TAS)

Is Here To Help You

What Is the Taxpayer Advocate Service?

The Taxpayer Advocate Service (TAS) is an independent

organization within the Internal Revenue Service (IRS). TAS

helps taxpayers resolve problems with the IRS, makes

administrative and legislative recommendations to prevent or

correct the problems, and protects taxpayer rights. We work

to ensure that every taxpayer is treated fairly and that you

know and understand your rights under the Taxpayer Bill of

Rights. We are Your Voice at the IRS.

How Can TAS Help Me?

TAS can help you resolve problems that you haven’t been

able to resolve with the IRS on your own. Always try to

Instructions for Form 1041 (2025)

resolve your problem with the IRS first, but if you can’t, then

come to TAS. Our services are free.

• TAS helps all taxpayers (and their representatives),

including individuals, businesses, and exempt organizations.

You may be eligible for TAS help if your IRS problem is

causing financial difficulty, if you’ve tried and been unable to

resolve your issue with the IRS, or if you believe an IRS

system, process, or procedure just isn’t working as it should.

• To get help any time with general tax topics, visit

www.TaxpayerAdvocate.IRS.gov. The site can help you with

common tax issues and situations, such as what to do if you

make a mistake on your return or if you get a notice from the

IRS.

• TAS works to resolve large-scale (systemic) problems that

affect many taxpayers. You can report systemic issues at

www.IRS.gov/SAMS. (Be sure not to include any personal

identifiable information.)

How Do I Contact TAS?

TAS has offices in every state, the District of Columbia, and

Puerto Rico. To find your local advocate’s number:

• Go to www.TaxpayerAdvocate.IRS.gov/Contact-Us,

• Check your local directory, or

• Call TAS toll free at 877-777-4778.

What Are My Rights as a Taxpayer?

The Taxpayer Bill of Rights describes ten basic rights that all

taxpayers have when dealing with the IRS. Go to

www.TaxpayerAdvocate.IRS.gov/Taxpayer-Rights for more

information about the rights, what they mean to you, and how

they apply to specific situations you may encounter with the

IRS. TAS strives to protect taxpayer rights and ensure the IRS

is administering the tax law in a fair and equitable way.

How To Get Forms and Publications

Internet. You can access the IRS website 24 hours a day, 7

days a week, at IRS.gov to:

• Download forms, including talking tax forms, instructions,

and publications;

• Order IRS products;

• Use the online Internal Revenue Code, regulations, and

other official guidance;

• Research your tax questions;

• Search publications by topic or keyword;

• Apply for an employer identification number (EIN); and

• Sign up to receive local and national tax news by email.

Getting tax forms and publications. The estate or trust

can download or print all of the forms and publications it may

need at IRS.gov/Forms. Otherwise, the estate or trust can go

to IRS.gov/OrderForms to order current forms, instructions,

and publications; call 800-829-3676 to order prior-year forms

and instructions. The IRS will process your order for forms

and publications as soon as possible. Don’t resubmit

requests you’ve already sent us. You can get forms and

publications faster online.

General Instructions

Purpose of Form

The fiduciary of a domestic decedent’s estate, trust, or

bankruptcy estate uses Form 1041 to report:

• The income, deductions, gains, losses, etc., of the estate

or trust;

Instructions for Form 1041 (2025)

• The income that is either accumulated or held for future

distribution or distributed currently to the beneficiaries;

• Any income tax liability of the estate or trust;

• Employment taxes on wages paid to household

employees; and

• Net Investment Income Tax (NIIT). See Schedule G, Part I,

line 5; and the Instructions for Form 8960.

Income Taxation of Trusts and

Decedents’ Estates

A trust or decedent’s estate is a separate legal entity for

federal tax purposes. A decedent’s estate comes into

existence at the time of death of an individual. A trust may be

created during an individual’s life (inter vivos) or at the time of

their death under a will (testamentary). If the trust instrument

contains certain provisions, then the person creating the trust

(the grantor) is treated as the owner of the trust’s assets.

Such a trust is a grantor type trust. See Grantor Type Trusts,

later, under Special Reporting Instructions.

A trust or decedent’s estate figures its gross income in

much the same manner as an individual. Most deductions

and credits allowed to individuals are also allowed to estates

and trusts. However, there is one major distinction. A trust or

decedent’s estate is allowed an income distribution

deduction for distributions to beneficiaries. To figure this

deduction, the fiduciary must complete Schedule B. The

income distribution deduction determines the amount of any

distributions taxed to the beneficiaries.

For this reason, a trust or decedent’s estate is sometimes

referred to as a “pass-through entity.” The beneficiary, and not

the trust or decedent’s estate, pays income tax on their

distributive share of income. Schedule K-1 (Form 1041) is

used to notify the beneficiaries of the amounts to be included

on their income tax returns.

Before preparing Form 1041, the fiduciary must figure the

accounting income of the estate or trust under the will or trust

instrument and applicable local law to determine the amount,

if any, of income that is required to be distributed, because

the income distribution deduction is based, in part, on that

amount.

Abusive Trust Arrangements

Certain trust arrangements claim to reduce or eliminate

federal taxes in ways that are not permitted under the law.

Abusive trust arrangements are typically promoted by the

promise of tax benefits with no meaningful change in the

taxpayer’s control over or benefit from the taxpayer’s income

or assets. The promised benefits may include reduction or

elimination of income subject to tax; deductions for personal

expenses paid by the trust; depreciation deductions of an

owner’s personal residence and furnishings; a stepped-up

basis for property transferred to the trust; the reduction or

elimination of self-employment taxes; and the reduction or

elimination of gift and estate taxes. These promised benefits

are inconsistent with the tax rules applicable to trust

arrangements.

Abusive trust arrangements often use trusts to hide the

true ownership of assets and income or to disguise the

substance of transactions. These arrangements frequently

involve more than one trust, each holding different assets of

the taxpayer (for example, the taxpayer’s business, business

equipment, home, automobile, etc.). Some trusts may hold

interests in other trusts, purport to involve charities, or are

foreign trusts. Funds may flow from one trust to another trust

3

by way of rental agreements, fees for services, purchase

agreements, and distributions.

Some of the abusive trust arrangements that have been

identified include unincorporated business trusts (or

organizations), equipment or service trusts, family residence

trusts, charitable trusts, and final trusts. In each of these

trusts, the original owner of the assets nominally subject to

the trust effectively retains the authority to cause financial

benefits of the trust to be directly or indirectly returned or

made available to the owner. For example, the trustee may be

the promoter, a relative, or a friend of the owner who simply

carries out the directions of the owner whether or not

permitted by the terms of the trust.

When trusts are used for legitimate business, family, or

estate planning purposes, either the trust, the beneficiary, or

the transferor of assets to the trust will pay the tax on income

generated by the trust property. Trusts can’t be used to

transform a taxpayer’s personal, living, or educational

expenses into deductible items, and can’t seek to avoid tax

liability by ignoring either the true ownership of income and

assets or the true substance of transactions. Therefore, the

tax results promised by the promoters of abusive trust

arrangements are not allowable under the law, and the

participants in and promoters of these arrangements may be

subject to civil or criminal penalties in appropriate cases.

For more details, including the legal principles that control

the proper tax treatment of these abusive trust arrangements,

see Notice 97-24, 1997-1 C.B. 409.

For additional information about abusive tax

arrangements, go to IRS.gov and type “Abusive Trusts” in the

search box.

Definitions

Adjusted gross income (AGI). Compute the AGI of an

estate or a non-grantor trust by subtracting the following from

total income on line 9 of page 1.

1. The administration costs of the estate or trust (the total

of lines 12, 14, and 15a to the extent they are costs incurred

in the administration of the estate or trust) that wouldn’t have

been incurred if the property were not held by the estate or

trust.

2. The income distribution deduction (line 18).

3. The amount of the exemption (line 21).

4. The net operating loss deduction (NOLD) claimed on

line 15b.

Electing small business trust (ESBT). Compute the

AGI of the S portion of an ESBT in the same manner as an

individual taxpayer, except that administration costs allocable

to the S portion (to the extent they are costs incurred in the

administration of the trust that wouldn’t have been incurred if

the property were not held by the estate or trust) shall be

deducted in arriving at AGI.

Beneficiary. A beneficiary includes an heir, a legatee, or a

devisee.

Decedent’s estate. The decedent’s estate is an entity that is

formed at the time of an individual’s death and is generally

charged with gathering the decedent’s assets, paying the

decedent’s debts and expenses, and distributing the

remaining assets. Generally, the estate consists of all the

property, real or personal, tangible or intangible, wherever

situated, that the decedent owned an interest in at death.

4

Distributable net income (DNI). The income distribution

deduction allowable to estates and trusts for amounts paid,

credited, or required to be distributed to beneficiaries is

limited to DNI. This amount, which is figured on Schedule B,

line 7, is also used to determine how much of an amount

paid, credited, or required to be distributed to a beneficiary

will be includible in their gross income.

Income in respect of a decedent (IRD). When completing

Form 1041, you must take into account any items that are

IRD.

In general, IRD is income that a decedent was entitled to

receive but that was not properly includible in the decedent’s

final income tax return under the decedent’s method of

accounting.

IRD includes:

• All accrued income of a decedent who reported their

income on the cash method of accounting,

• Income accrued solely because of the decedent’s death in

the case of a decedent who reported their income on the

accrual method of accounting, and

• Income to which the decedent had a contingent claim at

the time of their death.

Some examples of IRD for a decedent who kept their

books on the cash method are:

• Deferred salary payments that are payable to the

decedent’s estate,

• Uncollected interest on U.S. savings bonds,

• Proceeds from the completed sale of farm produce, and

• The portion of a lump-sum distribution to the beneficiary of

a decedent’s individual retirement arrangement (IRA) that

equals the balance in the IRA at the time of the owner’s

death. This includes unrealized appreciation and income

accrued to that date, less the aggregate amount of the

owner’s nondeductible contributions to the IRA. Such

amounts are included in the beneficiary’s gross income in the

tax year that the distribution is received.

The IRD has the same character it would have had if the

decedent had lived and received such amount.

Deductions and credits in respect of a decedent. The

following deductions and credits, when paid by the

decedent’s estate, are allowed on Form 1041 even though

they were not allowable on the decedent’s final income tax

return.

• Business expenses deductible under section 162.

• Interest deductible under section 163.

• Taxes deductible under section 164.

• Percentage depletion allowed under section 611.

• Foreign tax credit.

For more information on IRD, see section 691 and Pub.

559, Survivors, Executors, and Administrators.

Income required to be distributed currently. Income

required to be distributed currently is income that is required

under the terms of the governing instrument and applicable

local law to be distributed in the year it is received. The

fiduciary must be under a duty to distribute the income

currently, even if the actual distribution is not made until after

the close of the trust’s tax year. See Regulations section

1.651(a)-2.

Fiduciary. A fiduciary is a trustee of a trust, or an executor,

executrix, administrator, administratrix, personal

representative, or person in possession of property of a

decedent’s estate.

Instructions for Form 1041 (2025)

Note: Any reference in these instructions to “you” means the

fiduciary of the estate or trust.

• One or more U.S. persons have the authority to control all

substantial decisions of the trust (control test).

Trust. A trust is an arrangement created either by a will or by

an inter vivos declaration by which trustees take title to

property for the purpose of protecting or conserving it for the

beneficiaries under the ordinary rules applied in chancery or

probate courts.

See Regulations section 301.7701-7 for more information

on the court and control tests.

Revocable living trust. A revocable living trust is an

arrangement created by a written agreement or declaration

during the life of an individual and can be changed or ended

at any time during the individual’s life. A revocable living trust

is generally created to manage and distribute property. Many

people use this type of trust instead of (or in addition to) a

will.

Because this type of trust is revocable, it is treated as a

grantor type trust for tax purposes. See Grantor Type Trusts

under Special Reporting Instructions, later, for special filing

instructions that apply to grantor trusts.

Tip: Be sure to read Optional Filing Methods for Certain

Grantor Type Trusts, later. Generally, most people that have

revocable living trusts will be able to use Optional Method 1.

This method is the easiest and least burdensome way to

meet your obligations.

Who Must File

Decedent’s Estate

The fiduciary (or one of the joint fiduciaries) must file Form

1041 for a domestic estate that has:

1. Gross income for the tax year of $600 or more;

2. A beneficiary who is a nonresident alien; or

3. If you held a qualified investment in a QOF at any time

during the year, you must file your return with Form 8997

attached. See the Form 8997 instructions.

An estate is a domestic estate if it isn’t a foreign estate. A

foreign estate is one the income of which is from sources

outside the United States that isn’t effectively connected with

the conduct of a U.S. trade or business and isn’t includible in

gross income. If you are the fiduciary of a foreign estate, file

Form 1040-NR, U.S. Nonresident Alien Income Tax Return,

instead of Form 1041.

Trust

The fiduciary (or one of the joint fiduciaries) must file Form

1041 for a domestic trust taxable under section 641 that has:

1. Any taxable income for the tax year;

2. Gross income of $600 or more (regardless of taxable

income);

3. A beneficiary who is a nonresident alien; or

4. If you held a qualified investment in a QOF at any time

during the year, you must file your return with Form 8997

attached. See the Form 8997 instructions.

Two or more trusts are treated as one trust if the trusts

have substantially the same grantor(s) and substantially the

same primary beneficiary(ies) and a principal purpose of

such trusts is avoidance of tax. This provision applies only to

that portion of the trust that is attributable to contributions to

corpus made after March 1, 1984.

A trust is a domestic trust if:

• A U.S. court is able to exercise primary supervision over

the administration of the trust (court test), and

Instructions for Form 1041 (2025)

Also treated as a domestic trust is a trust (other than a

trust treated as wholly owned by the grantor) that:

• Was in existence on August 20, 1996;

• Was treated as a domestic trust on August 19, 1996; and

• Elected to continue to be treated as a domestic trust.

A trust that isn’t a domestic trust is treated as a foreign

trust. If you are the trustee of a foreign trust, file Form

1040-NR instead of Form 1041. Also, a foreign trust with a

U.S. owner must generally file Form 3520-A, Annual

Information Return of Foreign Trust With a U.S. Owner.

If a domestic trust becomes a foreign trust, it is treated

under section 684 as having transferred all of its assets to a

foreign trust, except to the extent a grantor or another person

is treated as the owner of the trust when the trust becomes a

foreign trust.

Grantor Type Trusts

If all or any portion of a trust is a grantor type trust, then that

trust or portion of a trust must follow the special reporting

requirements discussed later under Special Reporting

Instructions. See Grantor Type Trust under Specific

Instructions, later, for more details on what makes a trust a

grantor type trust.

Note: A trust may be part grantor trust and part “other” type

of trust, for example, simple or complex, or ESBT.

Qualified subchapter S trusts (QSSTs). QSSTs must

follow the special reporting requirements for these trusts,

discussed later under Special Reporting Instructions.

Special Rule for Certain Revocable Trusts

Section 645 provides that if both the executor (if any) of an

estate (the related estate) and the trustee of a qualified

revocable trust (QRT) elect the treatment in section 645, the

trust must be treated and taxed as part of the related estate

during the election period. This election may be made by a

QRT even if no executor is appointed for the related estate.

In general, Form 8855, Election To Treat a Qualified

Revocable Trust as Part of an Estate, must be filed by the due

date for Form 1041 for the first tax year of the related estate.

This applies even if the combined related estate and electing

trust don’t have sufficient income to be required to file Form

1041. However, if the estate is granted an extension of time

to file Form 1041 for its first tax year, the due date for Form

8855 is the extended due date.

Once made, the election is irrevocable.

Qualified revocable trusts (QRTs). In general, a QRT is

any trust (or part of a trust) that, on the day the decedent

died, was treated as owned by the decedent because the

decedent held the power to revoke the trust as described in

section 676. An electing trust is a QRT for which a section

645 election has been made.

Election period. The election period is the period of time

during which an electing trust is treated as part of its related

estate.

5

The election period begins on the date of the decedent’s

death and terminates on the earlier of:

• The day on which the electing trust and related estate, if

any, distribute all of their assets; or

• The day before the applicable date.

To determine the applicable date, first determine whether a

Form 706, United States Estate (and Generation-Skipping

Transfer) Tax Return, is required to be filed as a result of the

decedent’s death. If no Form 706 is required to be filed, the

applicable date is 2 years after the date of the decedent’s

death. If Form 706 is required, the applicable date is the later

of 2 years after the date of the decedent’s death or 6 months

after the final determination of liability for estate tax. For

additional information, see Regulations section 1.645-1(f).

Taxpayer identification number (TIN). All QRTs must

obtain a new TIN following the death of the decedent whether

or not a section 645 election is made. (Use Form W-9,

Request for Taxpayer Identification Number and Certification,

to notify payers of the new TIN.)

An electing trust that continues after the termination of the

election period doesn’t need to obtain a new TIN following

the termination unless:

• An executor was appointed and agreed to the election

after the electing trust made a valid section 645 election, and

the electing trust filed a return as an estate under the trust’s

TIN; or

• No executor was appointed and the QRT was the filing

trust (as explained later).

A related estate that continues after the termination of the

election period doesn’t need to obtain a new TIN.

For more information about TINs, including trusts with

multiple owners, see Regulations sections 1.645-1 and

301.6109-1(a).

General procedures for completing Form 1041 during

the election period.

If there is an executor. The following rules apply to filing

Form 1041 while the election is in effect.

• The executor of the related estate is responsible for filing

Form 1041 for the estate and all electing trusts. The return is

filed under the name and TIN of the related estate. Be sure to

check the “Decedent’s estate” box in item A at the top of

Form 1041 and item G(1) if the estate has made a section

645 election. The executor continues to file Form 1041 during

the election period even if the estate distributes all of its

assets before the end of the election period.

• The Form 1041 includes all items of income, deduction,

and credit for the estate and all electing trusts.

• For item G(2), the executor must provide the TIN of the

electing trust with the highest total asset value.

• The executor must attach a statement to Form 1041

providing the following information for each electing trust

(including the electing trust provided in item G(2)): (a) the

name of the electing trust, (b) the TIN of the electing trust,

and (c) the name and address of the trustee of the electing

trust.

• The related estate and the electing trust are treated as

separate shares for purposes of computing DNI and applying

distribution provisions. Also, each of those shares can

contain two or more separate shares. For more information,

see Separate share rule, later, and Regulations section

1.645-1(e)(2)(iii).

• The executor is responsible for ensuring that the estate’s

share of the combined tax obligation is paid.

6

For additional information, including treatment of transfers

between shares and charitable contribution deductions, see

Regulations section 1.645-1(e).

If there isn’t an executor. If no executor has been

appointed for the related estate, the trustee of the electing

trust files Form 1041 as if it were an estate. File using the TIN

that the QRT obtained after the death of the decedent. The

trustee can choose a fiscal year as the trust’s tax year during

the election period. Be sure to check the “Decedent’s estate”

box in item A at the top of Form 1041 and item G(1) if the

filing trust has made a section 645 election. For item G(2),

the filing trustee must provide the TIN of the electing trust

with the highest total asset value. The electing trust is entitled

to a single $600 personal exemption on returns filed for the

election period.

If there is more than one electing trust, the trusts must

appoint one trustee as the filing trustee. Form 1041 is filed

under the name and TIN of the filing trustee’s trust. A

statement providing the same information about the electing

trusts (except the filing trust) that is listed under If there is an

executor above must be attached to these Forms 1041. All

electing trusts must choose the same tax year.

If there is more than one electing trust, the filing trustee is

responsible for ensuring that the filing trust’s share of the

combined tax liability is paid.

For additional information on filing requirements when

there is no executor, including application of the separate

share rule, see Regulations section 1.645-1(e). For

information on the requirements when an executor is

appointed after an election is made and the executor doesn’t

agree to the election, see Later appointed executor, later.

Responsibilities of the trustee when there is an

executor (or there isn’t an executor and the trustee isn’t

the filing trustee). When there is an executor (or there isn’t

an executor and the trustee isn’t the filing trustee), the trustee

of an electing trust is responsible for the following during the

election period.

• To timely provide the executor with all the trust information

necessary to allow the executor to file a complete, accurate,

and timely Form 1041.

• To ensure that the electing trust’s share of the combined

tax liability is paid.

The trustee does not file a Form 1041 during the election

period (except for a final return if the trust terminates during

the election period, as explained later).

General procedures for completing Form 1041 for the

year in which the election terminates.

If there is an executor. If there is an executor, the Form

1041 filed under the name and TIN of the related estate for

the tax year in which the election terminates includes (a) the

items of income, deduction, and credit for the related estate

for its entire tax year; and (b) the income, deductions, and

credits for the electing trust for the period that ends with the

last day of the election period. If the estate won’t continue

after the close of the tax year, indicate that this Form 1041 is

a final return.

At the end of the last day of the election period, the

combined entity is deemed to distribute the share comprising

the electing trust to a new trust. All items of income, including

net capital gains, that are attributable to the share comprising

the electing trust are included in the calculation of DNI of the

electing trust and treated as distributed. The distribution rules

of sections 661 and 662 apply to this deemed distribution.

The combined entity is entitled to an income distribution

Instructions for Form 1041 (2025)

deduction for this deemed distribution, and the “new” trust

must include its share of the distribution in its income. See

Regulations sections 1.645-1(e)(2)(iii) and 1.645-1(h) for

more information.

If the electing trust continues in existence after the

termination of the election period, the trustee must file Form

1041 under the name and TIN of the trust, using the calendar

year as its accounting period, if it is otherwise required to file.

If there isn’t an executor. If there isn’t an executor, the

following rules apply to filing Form 1041 for the tax year in

which the election period ends.

• The tax year of the electing trust closes on the last day of

the election period, and the Form 1041 filed for that tax year

includes all items of income, deduction, and credit for the

electing trust for the period beginning with the first day of the

tax year and ending with the last day of the election period.

• The deemed distribution rules discussed above apply.

• Check the “Final return” box in item F at the top of Form

1041.

• If the filing trust continues after the termination of the

election period, the trustee must obtain a new TIN. If the trust

meets the filing requirements, the trustee must file a Form

1041 under the new TIN for the period beginning with the day

after the close of the election period and, in general, ending

December 31 of that year.

Responsibilities of the trustee when there is an

executor (or there isn’t an executor and the trustee isn’t

the filing trustee). In addition to the requirements listed

above under this same heading, the trustee is responsible for

the following.

• If the trust will not continue after the close of the election

period, the trustee must file a Form 1041 under the name and

TIN of the trust. Complete the entity information and items A,

C, D, and F. Indicate in item F that this is a final return. Don’t

report any items of income, deduction, or credit.

• If the trust will continue after the close of the election

period, the trustee must file a Form 1041 for the trust for the

tax year beginning the day after the close of the election

period and, in general, ending December 31 of that year. Use

the TIN obtained after the decedent’s death. Follow the

general rules for completing the return.

Special filing instructions.

When the election isn’t made by the due date of the

QRT’s Form 1041. If the section 645 election hasn’t been

made by the time the QRT’s first income tax return would be

due for the tax year beginning with the decedent’s death, but

the trustee and executor (if any) have decided to make a

section 645 election, then the QRT isn’t required to file a

Form 1041 for the short tax year beginning with the

decedent’s death and ending on December 31 of that year.

However, if a valid election isn’t subsequently made, the QRT

may be subject to penalties and interest for failure to file and

failure to pay.

If the QRT files a Form 1041 for this short period, and a

valid section 645 election is subsequently made, then the

trustee must file an amended Form 1041 for the electing

trust, excluding all items of income, deduction, and credit of

the electing trust. These amounts are then included on the

first Form 1041 filed by the executor for the related estate (or

the filing trustee for the electing trust filing as an estate).

Later appointed executor. If an executor for the related

estate isn’t appointed until after the trustee has made a valid

section 645 election, the executor must agree to the trustee’s

election and they must file a revised Form 8855 within 90

days of the appointment of the executor. If the executor

Instructions for Form 1041 (2025)

doesn’t agree to the election, the election terminates as of

the date of appointment of the executor.

If the executor agrees to the election, the trustee must

amend any Form 1041 filed under the name and TIN of the

electing trust for the period beginning with the decedent’s

death. The amended returns are still filed under the name

and TIN of the electing trust, and they must include the items

of income, deduction, and credit for the related estate for the

periods covered by the returns. Also, attach a statement to

the amended Forms 1041 identifying the name and TIN of

the related estate, and the name and address of the executor.

Check the “Final return” box on the amended return for the

tax year that ends with the appointment of the executor.

Except for this amended return, all returns filed for the

combined entity after the appointment of the executor must

be filed under the name and TIN of the related estate.

If the election terminates as the result of a later appointed

executor, the executor of the related estate must file Forms

1041 under the name and TIN of the related estate for all tax

years of the related estate beginning with the decedent’s

death. The electing trust’s election period and tax year

terminate the day before the appointment of the executor.

The trustee isn’t required to amend any of the returns filed by

the electing trust for the period prior to the appointment of the

executor. The trust must file a final Form 1041 following the

instructions above for completing Form 1041 in the year in

which the election terminates and there is no executor.

Termination of the trust during the election period. If

an electing trust terminates during the election period, the

trustee of that trust must file a final Form 1041 by completing

the entity information (using the trust’s EIN), checking the

“Final return” box in item F, and signing and dating the form.

Don’t report items of income, deduction, and credit. These

items are reported on the related estate’s return.

Alaska Native Settlement Trusts

The trustee of an Alaska Native Settlement Trust may elect

the special tax treatment for the trust and its beneficiaries

provided for in section 646. The election must be made by

the due date (including extensions) for filing the trust’s tax

return for its first tax year ending after June 7, 2001. Don’t

use Form 1041. Use Form 1041-N, U.S. Income Tax Return

for Electing Alaska Native Settlement Trusts, to make the

election. Additionally, Form 1041-N is the trust’s income tax

return and satisfies the section 6039H information reporting

requirement for the trust.

Bankruptcy Estate

The bankruptcy trustee or debtor-in-possession must file

Form 1041 for the estate of an individual involved in

bankruptcy proceedings under chapter 7 or 11 of title 11 of

the U.S. Code if the estate has gross income for the tax year

of $15,750 or more. See Bankruptcy Estates, later, for

details.

Charitable Remainder Trusts (CRTs)

A section 664 CRT doesn’t file Form 1041. Instead, a CRT

files Form 5227, Split-Interest Trust Information Return. If the

CRT has any unrelated business taxable income, it must also

file Form 4720, Return of Certain Excise Taxes Under

Chapters 41 and 42 of the Internal Revenue Code.

Common Trust Funds

Don’t file Form 1041 for a common trust fund maintained by a

bank. Instead, the fund may use Form 1065, U.S. Return of

7

Partnership Income, for its return. For more details, see

section 584 and Regulations section 1.6032-1.

The online application process takes 4–6 weeks to

complete.

ESBTs

Note: Existing e-file providers must now use e-Services to

make account updates.

ESBTs file Form 1041. However, see Electing Small Business

Trusts (ESBTs), later, for a discussion of the special reporting

requirements for these trusts.

Pooled Income Funds

Help is available online at e-Services or through the

e-Help Desk at 866-255-0654 (512-416-7750 for

international calls), Monday through Friday, 6:30 a.m.–6:00

p.m. (Central time). Frequently asked questions and Online

Tutorials are available to answer questions or to guide users

through the application process.

Qualified Funeral Trusts

If you file Form 1041 electronically, you may sign the return

electronically by using a personal identification number (PIN).

See Form 8879-F for details.

Pooled income funds file Form 1041. See Pooled Income

Funds, later, for the special reporting requirements for these

trusts. Additionally, pooled income funds must file Form 5227.

Trustees of pre-need funeral trusts who elect treatment under

section 685 file Form 1041-QFT, U.S. Income Tax Return for

Qualified Funeral Trusts. All other pre-need funeral trusts, see

Grantor Type Trusts, later, for Form 1041 reporting

requirements.

Qualified Settlement Funds (QSFs)

The trustee of a designated or QSF must generally file Form

1120-SF, U.S. Income Tax Return for Settlement Funds,

instead of Form 1041.

Special election. If a QSF has only one transferor, the

transferor may elect to treat the QSF as a grantor type trust.

To make the grantor trust election, the transferor must

attach an election statement to a timely filed Form 1041,

including extensions, that the administrator files for the QSF

for the tax year in which the settlement fund is established. If

Form 1041 isn’t filed because Optional Method 1 or 2

(described later) was chosen, attach the election statement

to a timely filed income tax return, including extensions, of

the transferor for the tax year in which the settlement fund is

established.

Election statement. The election statement may be

made separately or, if filed with Form 1041, on the

attachment described under Grantor Type Trusts, later. At the

top of the election statement, enter “Section 1.468B-1(k)

Election” and include the transferor’s:

• Name,

• Address,

• TIN, and

• Statement that they will treat the QSF as a grantor type

trust.

Widely Held Fixed Investment Trust (WHFITs)

Trustees and middlemen of WHFITs don’t file Form 1041.

Instead, they report all items of gross income and proceeds

on the appropriate Form 1099. For the definition of a WHFIT,

see Regulations section 1.671-5(b)(22). A tax information

statement that includes the information given to the IRS on

Forms 1099, as well as additional information identified in

Regulations section 1.671-5(e), must be given to trust

interest holders. See the General Instructions for Certain

Information Returns for more information.

Electronic Filing

Qualified fiduciaries or transmitters may be able to file Form

1041 and related schedules electronically. To become an

e-file provider, complete the following steps.

1. Create an IRS e-Services account.

2. Submit your e-file provider application online.

3. Pass a suitability check.

8

Caution: Form 8879-F can only be associated with a single

Form 1041. Form 8879-F can’t be used with multiple Forms

1041.

Form 1041 may also be e-filed using Form 8453-FE.

For more information about e-filing returns through MeF,

see Pub. 4164.

If Form 1041 is e-filed and there is a balance due, the

fiduciary may authorize an electronic funds withdrawal with

the return.

Private Delivery Services (PDSs)

You can use certain PDSs designated by the IRS to meet the

“timely mailing as timely filing/paying” rule for tax returns and

payments. Go to IRS.gov/PDS for the current list of

designated services.

The PDS can tell you how to get written proof of the

mailing date.

For the IRS mailing address to use if you’re using a PDS,

go to IRS.gov/PDSstreetAddresses.

Caution: PDSs can’t deliver items to P.O. boxes. You must

use the U.S. Postal Service to mail any item to an IRS P.O.

box address.

When To File

For calendar year estates and trusts, file Form 1041 and

Schedule(s) K-1 by April 15, 2026.

For fiscal-year estates and trusts, file Form 1041 by the

15th day of the 4th month following the close of the tax year.

For example, an estate that has a tax year that ends on June

30, 2026, must file Form 1041 by October 15, 2026. If the

due date falls on a Saturday, Sunday, or legal holiday, file on

the next business day.

Extension of Time To File

If more time is needed to file the estate or trust return, use

Form 7004, Application for Automatic Extension of Time To

File Certain Business Income Tax, Information, and Other

Returns, to apply for an automatic 51/2-month extension of

time to file.

Period Covered

File the 2025 return for calendar year 2025 and fiscal years

beginning in 2025 and ending in 2026. If the return is for a

fiscal year or a short tax year (less than 12 months), fill in the

tax year space at the top of the form.

The 2025 Form 1041 may also be used for a tax year

beginning in 2026 if:

Instructions for Form 1041 (2025)

Where To File

For all estates and trusts, including charitable and split-interest trusts (other than CRTs).

THEN use this address if you...

IF you are located in...

Are not enclosing a check or money order:

Are enclosing a check or money order:

Connecticut, Delaware, District of

Columbia, Georgia, Illinois, Indiana,

Kentucky, Maine, Maryland,

Massachusetts, Michigan, New

Hampshire, New Jersey, New York, North

Carolina, Ohio, Pennsylvania, Rhode

Island, South Carolina, Tennessee,

Vermont, Virginia, West Virginia,

Wisconsin

Department of the Treasury

Internal Revenue Service

Kansas City, MO 64999-0048

Department of the Treasury

Internal Revenue Service

Kansas City, MO 64999-0148

Alabama, Alaska, Arizona, Arkansas,

California, Colorado, Florida, Hawaii,

Idaho, Iowa, Kansas, Louisiana,

Minnesota, Mississippi, Missouri,

Montana, Nebraska, Nevada, New

Mexico, North Dakota, Oklahoma,

Oregon, South Dakota, Texas, Utah,

Washington, Wyoming

Department of the Treasury

Internal Revenue Service

Ogden, UT 84201-0048

Department of the Treasury

Internal Revenue Service

Ogden, UT 84201-0148

Internal Revenue Service

P.O. Box 409101

Ogden, UT 84409

Internal Revenue Service

P.O. Box 409101

Ogden, UT 84409

A foreign country or U.S. territory

1. The estate or trust has a tax year of less than 12

months that begins and ends in 2026, and

2. The 2026 Form 1041 isn’t available by the time the

estate or trust is required to file its tax return. However, the

estate or trust must show its 2026 tax year on the 2025 Form

1041 and incorporate any tax law changes that are effective

for tax years beginning after 2025.

Who Must Sign

Fiduciary

The fiduciary, or an authorized representative, must sign

Form 1041. If there are joint fiduciaries, only one is required

to sign the return.

A financial institution that submitted estimated tax

payments for trusts for which it is the trustee must enter its

EIN in the space provided for the EIN of the fiduciary. Don’t

enter the EIN of the trust. For this purpose, a financial

institution is one that maintains a Treasury Tax and Loan

(TT&L) account. If you are an attorney or other individual

functioning in a fiduciary capacity, leave this space blank.

Don’t enter your individual social security number (SSN).

Paid Preparer

Generally, anyone who is paid to prepare a tax return must

have a Preparer Tax Identification Number (PTIN), sign the

return, and fill in the other blanks in the Paid Preparer Use

Only area of the return.

The person required to sign the return must:

• Complete the required preparer information including their

PTIN,

• Sign it in the space provided for the preparer’s signature (a

facsimile signature is acceptable), and

• Give you a copy of the return for your records.

If you, as fiduciary, fill in Form 1041, leave the Paid

Preparer Use Only space blank.

Instructions for Form 1041 (2025)

If someone prepares this return and doesn’t charge you,

that person should not sign the return.

Paid Preparer Authorization

If the fiduciary wants to allow the IRS to discuss the estate’s

or trust’s 2025 tax return with the paid preparer who signed it,

check the “Yes” box in the signature area of the return. This

authorization applies only to the individual whose signature

appears in the Paid Preparer Use Only area of the estate’s or

trust’s return. It doesn’t apply to the firm, if any, shown in that

section.

If the “Yes” box is checked, the fiduciary is authorizing the

IRS to call the paid preparer to answer any questions that

may arise during the processing of the estate’s or trust’s

return. The fiduciary is also authorizing the paid preparer to:

• Give the IRS any information that is missing from the

estate’s or trust’s return;

• Call the IRS for information about the processing of the

estate’s or trust’s return or the status of its refund or

payment(s); and

• Respond to certain IRS notices that the fiduciary has

shared with the preparer about math errors, offsets, and

return preparation. The notices won’t be sent to the preparer.

The fiduciary isn’t authorizing the paid preparer to receive

any refund check, bind the estate or trust to anything

(including any additional tax liability), or otherwise represent

the estate or trust before the IRS.

The authorization will automatically end no later than the

due date (without regard to extensions) for filing the estate’s

or trust’s 2026 tax return. If the fiduciary wants to expand the

paid preparer’s authorization or revoke the authorization

before it ends, see Pub. 947, Practice Before the IRS and

Power of Attorney.

Accounting Methods

Figure taxable income using the method of accounting

regularly used in keeping the estate’s or trust’s books and

records. Generally, permissible methods include the cash

9

method, the accrual method, or any other method authorized

by the Internal Revenue Code. In all cases, the method used

must clearly reflect income.

Generally, the estate or trust may change its accounting

method (for income as a whole or for any material item) only

by getting consent on Form 3115, Application for Change in

Accounting Method. For more information, see Pub. 538,

Accounting Periods and Methods.

Accounting Periods

For a decedent’s estate, the moment of death determines the

end of the decedent’s tax year and the beginning of the

estate’s tax year. As executor or administrator, you choose

the estate’s tax period when you file its first income tax return.

The estate’s first tax year may be any period of 12 months or

less that ends on the last day of a month. If you select the last

day of any month other than December, you are adopting a

fiscal tax year.

To change the accounting period of an estate, use Form

1128, Application To Adopt, Change, or Retain a Tax Year.

Generally, a trust must adopt a calendar year. The

following trusts are exempt from this requirement.

• A trust that is exempt from tax under section 501(a).

• A charitable trust described in section 4947(a)(1).

• A trust that is treated as wholly owned by a grantor under

the rules of sections 671 through 679.

Rounding Off to Whole Dollars

You may round off cents to whole dollars on the estate’s or

trust’s return and schedules. If you do round to whole dollars,

you must round all amounts. To round, drop amounts under

50 cents and increase amounts from 50 to 99 cents to the

next dollar. For example, $1.39 becomes $1 and $2.50

becomes $3.

If you have to add two or more amounts to figure the

amount to enter on a line, include cents when adding the

amounts and round off only the total.

If you are entering amounts that include cents, make sure

to include the decimal point. There is no cents column on the

form.

Estimated Tax

Generally, an estate or trust must pay estimated income tax

for 2026 if it expects to owe, after subtracting any withholding

and credits, at least $1,000 in tax, and it expects the

withholding and credits to be less than the smaller of:

1. 90% of the tax shown on the 2026 tax return (662/3% of

the tax if the estate or trust qualifies as a farmer or fisherman

(fisher)); or

2. 100% of the tax shown on the 2025 tax return (110%

of that amount if the estate’s or trust’s AGI on that return is

more than $150,000, and less than 2/3 of gross income for

2025 and 2026 is from farming or fishing).

However, if a return was not filed for 2025 or that return

didn’t cover a full 12 months, item 2 doesn’t apply.

For this purpose, include household employment taxes in

the tax shown on the tax return but only if either of the

following is true.

• The estate or trust will have federal income tax withheld for

2026 (see the instructions for Schedule G, Part II, line 14).

• The estate or trust would be required to make estimated

tax payments for 2026 even if it didn’t include household

employment taxes when figuring estimated tax.

10

Exceptions

Estimated tax payments aren’t required from:

1. An estate of a domestic decedent or a domestic trust

that had no tax liability for the full 12-month 2025 tax year;

2. A decedent’s estate for any tax year ending before the

date that is 2 years after the decedent’s death; or

3. A trust that was treated as owned by the decedent if

the trust will receive the residue of the decedent’s estate

under the will (or, if no will is admitted to probate, is the trust

primarily responsible for paying debts, taxes, and expenses

of administration) for any tax year ending before the date that

is 2 years after the decedent’s death.

For more information, see Form 1041-ES, Estimated

Income Tax for Estates and Trusts.

Electronic Deposits

A financial institution that has been designated as an

authorized federal tax depository, and acts as a fiduciary for

at least 200 taxable trusts that are required to pay estimated

tax, is required to deposit the estimated tax payments

electronically using the Electronic Federal Tax Payment

System (EFTPS).

A fiduciary that isn’t required to make electronic deposits

of estimated tax on behalf of a trust or an estate may

voluntarily participate in EFTPS. To enroll in or get more

information about EFTPS, go to EFTPS.gov or call

800-555-4477. To contact EFTPS using Telecommunications

Relay Services (TRS) for people who are deaf, hard of

hearing, or have a speech disability, dial 711 and then

provide the TRS assistant the 800-555-4477 number above

or 800-733-4829. Also, see Pub. 966, Electronic Federal Tax

Payment System: A Guide to Getting Started.

Depositing on time. For a deposit using EFTPS to be on

time, the deposit must be submitted by 8:00 p.m. Eastern

time the day before the due date of the deposit.

Section 643(g) Election

Fiduciaries of trusts that pay estimated tax may elect under

section 643(g) to have any portion of their estimated tax

payments allocated to any of the beneficiaries.

The fiduciary of a decedent’s estate may make a section

643(g) election only for the final year of the estate.

Make the election by filing Form 1041-T, Allocation of

Estimated Tax Payments to Beneficiaries, by the 65th day

after the close of the estate’s or trust’s tax year. Then, include

that amount in box 13, code A, of Schedule K-1 (Form 1041)

for any beneficiaries for whom it was elected.

If Form 1041-T was timely filed, the payments are treated

as paid or credited to the beneficiary on the last day of the tax

year and must be included as an other amount paid, credited,

or required to be distributed on Form 1041, Schedule B,

line 10. See the instructions for Schedule B, line 10, later.

Failure to make a timely election will result in the estimated

tax payments not being transferred to the beneficiary(ies)

even if you entered the amount on Schedule K-1.

See the instructions for Schedule G, Part II, line 11, for

more details.

Instructions for Form 1041 (2025)

Interest and Penalties

Interest

Interest is charged on taxes not paid by the due date, even if

an extension of time to file is granted.

Interest is also charged on penalties imposed for failure to

file, negligence, fraud, substantial valuation misstatements,

substantial understatements of tax, and reportable

transaction understatements. Interest is charged on the

penalty from the due date of the return (including extensions).

The interest charge is figured at a rate determined under

section 6621.

Late Filing of Return

The law provides a penalty of 5% of the tax due for each

month, or part of a month, for which a return isn’t filed up to a

maximum of 25% of the tax due (15% for each month, or part

of a month, up to a maximum of 75% if the failure to file is

fraudulent). If the return is more than 60 days late, the

minimum penalty is the smaller of $525 or the tax due.

The penalty won’t be imposed if you can show that the

failure to file on time was due to reasonable cause. If you

receive a notice about penalty and interest after you file this

return, send us an explanation and we will determine if you

meet reasonable-cause criteria. Don’t attach an explanation

when you file Form 1041.

Late Payment of Tax

Generally, the penalty for not paying tax when due is 1/2 of 1%

of the unpaid amount for each month or part of a month it

remains unpaid. The maximum penalty is 25% of the unpaid

amount. The penalty applies to any unpaid tax on the return.

Any penalty is in addition to interest charges on late

payments.

Tip: If you include interest on either of these penalties with

your payment, identify and enter these amounts in the bottom

margin of Form 1041, page 1. Don’t include the interest or

penalty amount in the balance of tax due on line 28.

Failure To Provide Information Timely

You must provide Schedule K-1 (Form 1041), on or before

the day you are required to file Form 1041, to each

beneficiary who receives a distribution of property or an

allocation of an item of the estate.

For each failure to provide Schedule K-1 to a beneficiary

when due and each failure to include on Schedule K-1 all the

information required to be shown (or the inclusion of incorrect

information), a $340 penalty may be imposed with regard to

each Schedule K-1 for which a failure occurs. The maximum

penalty is $4,098,500 for all such failures during a calendar

year. If the requirement to report information is intentionally

disregarded, each $340 penalty is increased to $680 or, if

greater, 10% of the aggregate amount of items required to be

reported, and no maximum penalty applies.

The penalty won’t be imposed if the fiduciary can show

that not providing information timely and correctly was due to

reasonable cause and not due to willful neglect.

Underpaid Estimated Tax

If the fiduciary underpaid estimated tax, use Form 2210,

Underpayment of Estimated Tax by Individuals, Estates, and

Trusts, to figure any penalty. Enter the amount of any penalty

on Form 1041, line 27.

Instructions for Form 1041 (2025)

Trust Fund Recovery Penalty

This penalty may apply if certain excise, income, social

security, and Medicare taxes that must be collected or

withheld aren’t collected or withheld, or these taxes aren’t

paid. These taxes are generally reported on Forms 720, 941,

943, 944, or 945. The trust fund recovery penalty may be

imposed on all persons who are determined by the IRS to

have been responsible for collecting, accounting for, or

paying over these taxes, and who acted willfully in not doing

so. The penalty is equal to the unpaid trust fund tax. See the

Instructions for Form 720; or Pub. 15 (Circular E), Employer’s

Tax Guide, for more details, including the definition of

responsible persons.

Other Penalties

Other penalties can be imposed for negligence, substantial

understatement of tax, and fraud. See Pub. 17, Your Federal

Income Tax, for details on these penalties.

Other Forms That May Be Required

Form W-2, Wage and Tax Statement, and Form W-3,

Transmittal of Wage and Tax Statements.

Form 56, Notice Concerning Fiduciary Relationship. You

must notify the IRS of the creation or termination of a

fiduciary relationship. You may use Form 56 to provide this

notice to the IRS.

Form 461, Limitation on Business Losses.

Form 706, United States Estate (and Generation-Skipping

Transfer) Tax Return; or Form 706-NA, United States Estate

(and Generation-Skipping Transfer) Tax Return, Estate of

nonresident not a citizen of the United States.

Form 706-GS(D), Generation-Skipping Transfer Tax

Return for Distributions.

Form 706-GS(D-1), Notification of Distribution From a

Generation-Skipping Trust.

Form 706-GS(T), Generation-Skipping Transfer Tax

Return for Terminations.

Form 709, United States Gift (and Generation-Skipping

Transfer) Tax Return; or Form 709-NA, United States Gift

(and Generation-Skipping Transfer) Tax Return of

Nonresident Not a Citizen of the United States.

Form 720, Quarterly Federal Excise Tax Return. Use Form

720 to report environmental excise taxes, communications

and air transportation taxes, fuel taxes, luxury tax on

passenger vehicles, manufacturers’ taxes, ship passenger

tax, and certain other excise taxes.

Caution: See Trust Fund Recovery Penalty, earlier.

!

See Trust Fund Recovery Penalty, earlier.

CAUTION

Form 926, Return by a U.S. Transferor of Property to a

Foreign Corporation. Use this form to report certain

information required under section 6038B.

Form 940, Employer’s Annual Federal Unemployment

(FUTA) Tax Return. The estate or trust may be liable for FUTA

tax and may have to file Form 940 if it paid wages of $1,500

or more in any calendar quarter during the calendar year (or

the preceding calendar year) or one or more employees

worked for the estate or trust for some part of a day in any 20

11

different weeks during the calendar year (or the preceding

calendar year).

Form 941, Employer’s QUARTERLY Federal Tax Return.

Employers must file this form quarterly to report income tax

withheld on wages and employer and employee social

security and Medicare taxes. Certain small employers must

file Form 944, Employer’s ANNUAL Federal Tax Return,

instead of Form 941. For more information, see the

Instructions for Form 944. Agricultural employers must file

Form 943, Employer’s Annual Federal Tax Return for

Agricultural Employees, instead of Form 941, to report

income tax withheld and employer and employee social

security and Medicare taxes on farmworkers.

Caution: See Trust Fund Recovery Penalty, earlier.

Form 945, Annual Return of Withheld Federal Income Tax.

Use this form to report income tax withheld from nonpayroll

payments, including pensions, annuities, IRAs, gambling

winnings, and backup withholding.

Caution: See Trust Fund Recovery Penalty, earlier.

Form 965-A, Individual Report of Net 965 Tax Liability.

Form 982, Reduction of Tax Attributes Due to Discharge of

Indebtedness (and Section 1082 Basis Adjustment).

Form 1040, U.S. Individual Income Tax Return.

Form 1040-NR, U.S. Nonresident Alien Income Tax

Return.

Form 1040-SR, U.S. Income Tax Return for Seniors.

Form 1041-A, U.S. Information Return Trust Accumulation

of Charitable Amounts.

regulation, that are not otherwise adequately disclosed on a

tax return. The disclosure is made to avoid parts of the

accuracy-related penalty imposed for disregard of rules or

substantial understatement of tax. Form 8275 is also used for

disclosures relating to preparer penalties for

understatements due to unrealistic positions or disregard of

rules.

Form 8275-R, Regulation Disclosure Statement, is used to

disclose any item on a tax return for which a position has

been taken that is contrary to Treasury regulations.

Form 8288, U.S. Withholding Tax Return for Certain

Dispositions by Foreign Persons; and Form 8288-A,

Statement of Withholding on Certain Dispositions by Foreign

Persons. Use these forms to report and transmit withheld tax

on the sale of U.S. real property by a foreign person. Also,

use these forms to report and transmit tax withheld from

amounts distributed to a foreign beneficiary from a “U.S. real

property interest account” that a domestic estate or trust is

required to establish under Regulations section 1.1445-5(c)

(1)(iii).

Form 8300, Report of Cash Payments Over $10,000

Received in a Trade or Business. Generally, this form is used

to report the receipt of more than $10,000 in cash or foreign

currency in one transaction (or a series of related

transactions).

Form 8855, Election To Treat a Qualified Revocable Trust

as Part of an Estate. This election allows a QRT to be treated

and taxed (for income tax purposes) as part of its related

estate during the election period.

Forms 1099-A, B, INT, LTC, MISC, NEC, OID, Q, R, S, and

SA. You may have to file these information returns to report

acquisitions or abandonments of secured property; proceeds

from broker and barter exchange transactions; interest

payments; payments of long-term care and accelerated

death benefits; miscellaneous income payments;

nonemployee compensation; original issue discount;

distributions from Coverdell ESAs; distributions from

pensions, annuities, retirement or profit-sharing plans, IRAs

(including SEPs, SIMPLEs, Roth IRAs, Roth conversions,

and IRA recharacterizations), insurance contracts, etc.;

proceeds from real estate transactions; and distributions from

an HSA, Archer MSA, or Medicare Advantage MSA.

Form 8865, Return of U.S. Persons With Respect to

Certain Foreign Partnerships. The estate or trust may have to

file Form 8865 if it:

1. Controlled a foreign partnership (that is, owned more

than a 50% direct or indirect interest in a foreign partnership);

2. Owned at least a 10% direct or indirect interest in a

foreign partnership while U.S. persons controlled that

partnership;

3. Had an acquisition, disposition, or change in

proportional interest in a foreign partnership that:

a. Increased its direct interest to at least 10%,

b. Reduced its direct interest of at least 10% to less than

10%, or

c. Changed its direct interest by at least a 10% interest;

or

4. Contributed property to a foreign partnership in

exchange for a partnership interest if:

a. Immediately after the contribution, the estate or trust

owned, directly or indirectly, at least a 10% interest in the

foreign partnership; or

b. The fair market value (FMV) of the property the estate

or trust contributed to the foreign partnership, for a

partnership interest, when added to other contributions of

property made to the foreign partnership during the

preceding 12-month period, exceeds $100,000.

Also, use certain of these returns to report amounts

received as a nominee on behalf of another person, except

amounts reported to beneficiaries on Schedule K-1 (Form

1041).

Also, the estate or trust may have to file Form 8865 to

report certain dispositions by a foreign partnership of

property it previously contributed to that foreign partnership if

it was a partner at the time of the disposition.

Form 8275, Disclosure Statement. File Form 8275 to

disclose items or positions, except those contrary to a

For more details, including penalties for failing to file Form

8865, see Form 8865 and its separate instructions.

Form 1042, Annual Withholding Tax Return for U.S.

Source Income of Foreign Persons; and Form 1042-S,

Foreign Person’s U.S. Source Income Subject to Withholding.

Use these forms to report and transmit withheld tax on

payments or distributions made to nonresident alien

individuals, foreign partnerships, or foreign corporations to

the extent such payments or distributions constitute gross

income from sources within the United States that isn’t

effectively connected with a U.S. trade or business. For more

information, see sections 1441 and 1442; and Pub. 515,

Withholding of Tax on Nonresident Aliens and Foreign

Entities.

12

Instructions for Form 1041 (2025)

Form 8886, Reportable Transaction Disclosure Statement.

Use Form 8886 to disclose information for each reportable

transaction in which the trust participated directly or indirectly.

Form 8886 must be filed for each tax year that the federal

income tax liability of the estate or trust is affected by its

participation in the transaction. The estate or trust may have

to pay a penalty if it has a requirement to file Form 8886 but

you fail to file it. The following are reportable transactions.

• Any transaction that is the same as or substantially similar

to tax avoidance transactions identified by the IRS as listed

transactions.

• Any transaction offered under conditions of confidentiality

and for which the estate or trust paid a minimum fee

(confidential transaction).

• Any transaction for which the estate or trust or a related

party has contractual protection against disallowance of the

tax benefits (transaction with contractual protection).

• Any transaction resulting in a loss of at least $2 million in

any single year or $4 million in any combination of years

($50,000 in any single year if the loss is generated by a

section 988 transaction) (loss transactions).

• Any transaction substantially similar to one of the types of

transactions identified by the IRS as a transaction of interest.

See the Instructions for Form 8886 for more details and

exceptions.

Form 8918, Material Advisor Disclosure Statement.

Material advisors who provide material aid, assistance, or

advice on organizing, managing, promoting, selling,

implementing, insuring, or carrying out any reportable

transaction, and who directly or indirectly receive or expect to

receive a minimum fee, must use Form 8918 to disclose any

reportable transaction under Regulations section

301.6111-3. For more information, see Form 8918 and its

instructions.

Form 8938, Statement of Specified Foreign Financial

Assets.

• Pub. 590-A, Contributions to Individual Retirement

Arrangements (IRAs).

• Pub. 590-B, Distributions from Individual Retirement

Arrangements (IRAs).

Assembly and Attachments

Assemble any schedules, forms, and attachments behind

Form 1041 in the following order.

1. Schedule I (Form 1041).

2. Form 4952.

3. Schedule H (Form 1040).

4. Schedule D (Form 1041).

5. Form 8949.

6. Form 4797.

7. Form 8995 or 8995-A.

8. Schedules C, E, and/or F (Form 1040).

9. Form 4136.

10. Form 8978.

11. Form 965-A.

12. Form 8941.

13. Form 3800.

14. Form 8997.

15. Form 8283.

16. Form 8960.

17. Schedule A (Form 8936).

18. Form 4255.

19. Additional schedules in alphabetical order.

20. Additional forms in numerical order.

21. All other attachments.

Attachments

Form 8960, Net Investment Income Tax—Individuals,

Estates, and Trusts.

If you need more space on the forms or schedules, attach

separate sheets. Use the same size and format as on the

printed forms. But show the totals on the printed forms.

Form 8971, Information Regarding Beneficiaries Acquiring

Property From a Decedent.

Attach these separate sheets after all the schedules and

forms. Enter the estate’s or trust’s EIN on each sheet.

Form 8975, Country-by-Country Report.

Schedule A (Form 8975), Tax Jurisdiction and Constituent

Entity Information.

Form 8978, Partner’s Additional Reporting Year Tax.

Form 8990, Limitation on Business Interest Expense

Under Section 163(j).

Form 8992, U.S. Shareholder Calculation of Global

Intangible Low-Taxed Income (GILTI).

Form 8995, Qualified Business Income Deduction

Simplified Computation.

Form 8995-A, Qualified Business Income Deduction.

Form 8997, Initial and Annual Statement of Qualified

Opportunity Fund (QOF) Investments.

Additional Information

The following publications may assist you in preparing Form

1041.

• Pub. 550, Investment Income and Expenses.

• Pub. 559, Survivors, Executors, and Administrators.

Instructions for Form 1041 (2025)

Don’t file a copy of the decedent’s will or the trust

instrument unless the IRS requests it.

Special Reporting Instructions

Grantor type trusts, the S portion of ESBTs, and bankruptcy

estates all have reporting requirements that are significantly

different from other subchapter J trusts and decedents’

estates. Additionally, grantor type trusts have optional filing

methods available. Pooled income funds have many similar

reporting requirements that other subchapter J trusts (other

than grantor type trusts and ESBTs) have but there are some

very important differences. These reporting differences and

optional filing methods are discussed below by entity.

Grantor Type Trusts

A trust is a grantor trust if the grantor retains certain powers

or ownership benefits. This can also apply to only a portion of

a trust. See Grantor Type Trust, later, for details on what

makes a trust a grantor trust.

In general, a grantor trust is ignored for income tax

purposes and all of the income, deductions, etc., are treated

13

as belonging directly to the grantor. This also applies to any

portion of a trust that is treated as a grantor trust.

Note: If only a portion of the trust is a grantor type trust,

indicate both grantor trust and the other type of trust, for

example, simple or complex trust, as the type of entities

checked in Section A on page 1 of Form 1041.

Caution: The following instructions apply only to grantor

type trusts that are not using an optional filing method.

How to report. If the entire trust is a grantor trust, fill in only

the entity information of Form 1041. Don’t show any dollar

amounts on the form itself; show dollar amounts only on an

attachment to the form. Don’t use Schedule K-1 (Form 1041)

as the attachment.

If only part of the trust is a grantor type trust, the portion of

the income, deductions, etc., that is allocable to the

non-grantor part of the trust is reported on Form 1041, under

normal reporting rules. The amounts that are allocable

directly to the grantor are shown only on an attachment to the

form. Don’t use Schedule K-1 (Form 1041) as the

attachment. However, Schedule K-1 is used to reflect any

income distributed from the portion of the trust that isn’t

taxable directly to the grantor or owner.

The fiduciary must give the grantor (owner) of the trust a

copy of the attachment.

Attachment. On the attachment, show:

• The name, identifying number, and address of the

person(s) to whom the income is taxable;

• The income of the trust that is taxable to the grantor or

another person under sections 671 through 678—report the

income in the same detail as it would be reported on the

grantor’s return had it been received directly by the grantor;

and

• Any deductions, credits, or elections that apply to this

income. Report these deductions and credits in the same

detail as they would be reported on the grantor’s return had

they been received directly by the grantor.

The income taxable to the grantor or another person under

sections 671 through 678 and the deductions and credits that

apply to that income must be reported by that person on their

own income tax return.

Example. The John Doe Trust is a grantor type trust.

During the year, the trust sold 100 shares of ABC stock for

$1,010 in which it had a basis of $10 and 200 shares of XYZ

stock for $10 in which it had a $1,020 basis.

The trust doesn’t report these transactions on Form 1041.

Instead, a schedule is attached to the Form 1041 showing

each stock transaction separately and in the same detail as

John Doe (grantor and owner) will need to report these

transactions on his Form 8949, Sales and Other Dispositions

of Capital Assets; and Schedule D (Form 1040). The trust

doesn’t net the capital gains and losses, nor does it issue

John Doe a Schedule K-1 (Form 1041) showing a $10

long-term capital loss.

QSSTs. Income allocated to S corporation stock held by the

trust is treated as owned by the income beneficiary of the

portion of the trust that owns the stock. Report this income

following the rules discussed above for grantor type trusts. A

QSST can’t elect any of the optional filing methods discussed

below.

However, the trust, and not the income beneficiary, is

treated as the owner of the S corporation stock for figuring

and attributing the tax results of a disposition of the stock. For

14

example, if the disposition is a sale, the QSST election ends

as to the stock sold, and any gain or loss recognized on the

sale will be that of the trust. For more information on QSSTs,

see Regulations section 1.1361-1(j).

Optional Filing Methods for Certain Grantor Type

Trusts

Generally, if a trust is treated as owned by one grantor or by

one other person, the trustee may choose Optional Method 1

or Optional Method 2 as the trust’s method of reporting

instead of filing Form 1041. Spouses will be treated as one

grantor for purposes of these two optional methods if:

• All of the trust is treated as owned by the spouses, and

• The spouses file their income tax return jointly for that tax

year.

Generally, if a trust is treated as owned by two or more

grantors or other persons, the trustee may choose Optional

Method 3 as the trust’s method of reporting instead of filing

Form 1041.

Once you choose the trust’s filing method, you must follow

the rules under Changing filing methods, later, if you want to

change to another method.

Exceptions. The following trusts can’t report using the

optional filing methods.

• A common trust fund (as defined in section 584(a)).

• A foreign trust or a trust that has any of its assets located

outside the United States.

• A QSST (as defined in section 1361(d)(3)).

• A trust all of which is treated as owned by one grantor or

one other person whose tax year is other than a calendar

year.

• A trust all of which is treated as owned by one or more

grantors or other persons, one of which isn’t a U.S. person.

• A trust all of which is treated as owned by one or more

grantors or other persons if at least one grantor or other

person is an exempt recipient for information reporting

purposes, unless at least one grantor or other person isn’t an

exempt recipient and the trustee reports without treating any

of the grantors or other persons as exempt recipients.

Optional Method 1. For a trust treated as owned by one

grantor or by one other person, the trustee must give all

payers of income during the tax year the name and TIN of the

grantor or other person treated as the owner of the trust and

the address of the trust. This method may be used only if the

owner of the trust provides the trustee with a signed Form

W-9. In addition, unless the grantor or other person treated

as owner of the trust is the trustee or a co-trustee of the trust,

the trustee must give the grantor or other person treated as

owner of the trust a statement that:

• Shows all items of income, deduction, and credit of the

trust;

• Identifies the payer of each item of income;

• Explains how the grantor or other person treated as owner

of the trust takes those items into account when figuring the

grantor’s or other person’s taxable income or tax; and

• Informs the grantor or other person treated as the owner of

the trust that those items must be included when figuring

taxable income and credits on their income tax return.

Tip: Grantor trusts that haven’t applied for an EIN and are

going to file under Optional Method 1 don’t need an EIN for

the trust as long as they continue to report under that

method.

Instructions for Form 1041 (2025)

Optional Method 2. For a trust treated as owned by one

grantor or by one other person, the trustee must give all

payers of income during the tax year the name, address, and

TIN of the trust. The trustee must also file with the IRS the

appropriate Forms 1099 to report the income or gross

proceeds paid to the trust during the tax year that show the

trust as the payer and the grantor, or other person treated as

owner, as the payee. The trustee must report each type of

income in the aggregate and each item of gross proceeds

separately. The due date for any Forms 1099 required to be

filed with the IRS by a trustee under this method is February

28, 2026 (March 31, 2026, if filed electronically). If the due

date falls on a Saturday, Sunday, or legal holiday, file on the

next business day.

In addition, unless the grantor, or other person treated as

owner of the trust, is the trustee or a co-trustee of the trust,

the trustee must give the grantor or other person treated as

owner of the trust a statement that:

• Shows all items of income, deduction, and credit of the

trust;

• Explains how the grantor or other person treated as owner

of the trust takes those items into account when figuring the

grantor’s or other person’s taxable income or tax; and

• Informs the grantor or other person treated as the owner of

the trust that those items must be included when figuring

taxable income and credits on their income tax return. This

statement satisfies the requirement to give the recipient

copies of the Forms 1099 filed by the trustee.

Optional Method 3. For a trust treated as owned by two or

more grantors or other persons, the trustee must give all

payers of income during the tax year the name, address, and

TIN of the trust. The trustee must also file with the IRS the

appropriate Forms 1099 to report the income or gross

proceeds paid to the trust by all payers during the tax year

attributable to the part of the trust treated as owned by each

grantor, or other person, showing the trust as the payer and

each grantor, or other person treated as owner of the trust, as

the payee. The trustee must report each type of income in the

aggregate and each item of gross proceeds separately. The

due date for any Forms 1099 required to be filed with the IRS

by a trustee under this method is February 28, 2026 (March

31, 2026, if filed electronically). If the due date falls on a

Saturday, Sunday, or legal holiday, file on the next business

day.

In addition, the trustee must give each grantor or other

person treated as owner of the trust a statement that:

• Shows all items of income, deduction, and credit of the

trust attributable to the part of the trust treated as owned by

the grantor or other person;

• Explains how the grantor or other person treated as owner

of the trust takes those items into account when figuring the

grantor’s or other person’s taxable income or tax; and

• Informs the grantor or other person treated as the owner of

the trust that those items must be included when figuring

taxable income and credits on their income tax return. This

statement satisfies the requirement to give the recipient

copies of the Forms 1099 filed by the trustee.

Changing filing methods. A trustee who previously had

filed Form 1041 can change to one of the optional methods

by filing a final Form 1041 for the tax year that immediately

precedes the first tax year for which the trustee elects to

report under one of the optional methods. On the front of the

final Form 1041, the trustee must enter “Pursuant to section

1.671-4(g), this is the final Form 1041 for this grantor trust,”

and check the “Final return” box in item F.

Instructions for Form 1041 (2025)

For more details on changing reporting methods, including

changes from one optional method to another, see

Regulations section 1.671-4(g).

Backup withholding. The following grantor trusts are

treated as payors for purposes of backup withholding.

1. A trust established after 1995, all of which is owned by

two or more grantors (treating spouses filing a joint return as

one grantor).

2. A trust with 10 or more grantors established after 1983

but before 1996.

The trustee must withhold a certain percentage of

reportable payments made to any grantor who is subject to

backup withholding.

For more information, see section 3406 and its

regulations.

Pooled Income Funds

If you are filing for a pooled income fund, attach a statement

to support the following.

• The calculation of the yearly rate of return.

• The computation of the deduction for distributions to the

beneficiaries.

• The computation of any charitable deduction.

See section 642 and the regulations thereunder for more

information.

You don’t have to complete Schedule A or B of Form 1041.

Also, you must file Form 5227 for the pooled income fund.

However, if all amounts were transferred in trust before May

27, 1969, or if an amount was transferred to the trust after

May 26, 1969, for which no deduction was allowed under any

of the sections listed under section 4947(a)(2), then Form

5227 does not have to be filed.

Note: Form 1041-A is no longer filed by pooled income

funds.

Electing Small Business Trusts (ESBTs)

Special rules apply when figuring the tax on the S portion of

an ESBT. The S portion of an ESBT is the portion of the trust

that consists of stock in one or more S corporations and isn’t

treated as a grantor type trust. The tax on the S portion:

• Must be figured separately from the tax on the remainder

of the ESBT (if any) and attached to the return; and

• Is entered on Schedule G, Part I, line 4.

The tax on the remainder (non-S portion) of the ESBT is

figured in the normal manner on Form 1041.

Tax computation attachment. Attach to the return the tax

computation for the S portion of the ESBT.

If you need to complete and attach a tax form or

worksheet for the S portion of the trust, enter “ESBT” in the

top margin of the tax form, worksheet, or attachment.

To compute the tax on the S portion:

• Treat that portion of the ESBT as if it were a separate trust;

• Include only the income, losses, deductions, and credits

allocated to the ESBT as an S corporation shareholder and

gain or loss from the disposition of S corporation stock;

• Aggregate items of income, losses, deductions, and

credits allocated to the ESBT as an S corporation

shareholder if the S portion of the ESBT has stock in more

than one S corporation;

• Deduct state and local income taxes directly related to the

S portion or allocated to the S portion if the allocation is

15

reasonable in light of all the circumstances and

administrative expenses that wouldn’t have been incurred if

the S corporation shares were not held by the trust;

• Deduct interest expense paid or accrued on indebtedness

incurred to acquire stock in an S corporation; and

• Deduct charitable contributions attributable to the S

portion. See Pub. 526, Charitable Contributions, to figure the

amount of the deduction if either of the following applies.

1. Cash contributions or contributions of ordinary income

property are more than 30% of the AGI of the S portion.

2. Gifts of capital gain property are more than 20% of the

AGI of the S portion.

• Don’t claim a deduction for capital losses in excess of

capital gains;

• Don’t claim an income distribution deduction or an

exemption amount;

• Don’t claim an exemption amount in figuring the alternative

minimum tax (AMT); and

• Don’t use the tax rate schedule to figure the tax. The tax is

37% of the S portion’s taxable income except in figuring the

maximum tax on qualified dividends and capital gains.

For additional information, see Regulations section

1.641(c)-1.

Other information. When figuring the tax and DNI on the

remaining (non-S) portion of the trust, disregard the S

corporation items.

Don’t apportion to the beneficiaries any of the S

corporation items.

If the ESBT consists entirely of stock in one or more S

corporations, don’t make any entries on lines 1–23 of page 1.

Instead:

• Complete the entity portion;

• Follow the instructions above for figuring the tax on the S

corporation items;

• Enter the ESBT tax on Schedule G, Part I, line 4;

• Carry the “Total tax” from line 9 of Schedule G, Part I, to

line 24 on page 1; and

• Complete the rest of the return.

The grantor portion (if any) of an ESBT will follow the rules

discussed under Grantor Type Trusts, earlier.

Bankruptcy Estates

The bankruptcy estate that is created when an individual

debtor files a petition under either chapter 7 or 11 of title 11 of

the U.S. Code is treated as a separate taxable entity. The

bankruptcy estate is administered by a trustee or a

debtor-in-possession. If the case is later dismissed by the

bankruptcy court, the individual debtor is treated as if the

bankruptcy petition had never been filed.

A separate taxable entity isn’t created if a partnership or

corporation files a petition under any chapter of title 11 of the

U.S. Code.

For additional information about bankruptcy estates, see

Pub. 908, Bankruptcy Tax Guide.

Who Must File

Every trustee (or debtor-in-possession) for an individual’s

bankruptcy estate under chapter 7 or 11 of title 11 of the U.S.

Code must file a return if the bankruptcy estate has gross

income of $15,750 or more for tax years beginning in 2025.

Failure to do so may result in an estimated Request for

Administrative Expenses being filed by the IRS in the

16

bankruptcy proceeding or a motion to compel filing of the

return.

Caution: The filing of a tax return for the bankruptcy estate

doesn’t relieve the individual debtor(s) of their individual tax

obligations.

EIN

Every bankruptcy estate of an individual required to file a

return must have its own EIN. The SSN of the individual

debtor can’t be used as the EIN for the bankruptcy estate.

Accounting Period

A bankruptcy estate is allowed to have a fiscal year. However,

this period can’t be longer than 12 months.

When To File

File Form 1041 on or before the 15th day of the 4th month

following the close of the tax year. Use Form 7004 to apply for

an automatic 6-month extension of time to file.

Disclosure of Return Information

Under section 6103(e)(5), tax returns of individual debtors

who have filed for bankruptcy under chapter 7 or 11 of title 11

are, upon written request, open to inspection by or disclosure

to the trustee.

The returns subject to disclosure to the trustee are those

for the year the bankruptcy begins and prior years. Use Form

4506, Request for Copy of Tax Return, to request copies of

the individual debtor’s tax returns.

If the bankruptcy case wasn’t voluntary, disclosure can’t

be made before the bankruptcy court has entered an order

for relief, unless the court rules that the disclosure is needed

for determining whether relief should be ordered.

Transfer of Tax Attributes From the Individual

Debtor to the Bankruptcy Estate

The bankruptcy estate succeeds to the following tax

attributes of the individual debtor.

1. NOL carryovers.

2. Charitable contribution carryovers.

3. Recovery of tax benefit items.

4. Credit carryovers.

5. Capital loss carryovers.

6. Basis, holding period, and character of assets.

7. Method of accounting.

8. Unused passive activity losses.

9. Unused passive activity credits.

10. Unused section 465 losses.

Income, Deductions, and Credits

Under section 1398(c), the taxable income of the bankruptcy

estate is generally figured in the same manner as that of an

individual. The gross income of the bankruptcy estate

includes any income included in property of the estate as

defined in U.S. Code, title 11, sections 541, 1115, and 1186.

Instructions for Form 1041 (2025)

In certain chapter 11 cases, under section 1115 of title 11,

property of the bankruptcy estate includes (a) earnings from

services performed by the debtor after the beginning of the

case (both wages and self-employment income) and before

the case is closed, dismissed, or converted to a case under a

different chapter; and (b) property described in section 541 of

title 11 and income earned therefrom that the debtor acquires

after the beginning of the case and before the case is closed,

dismissed, or converted. If section 1115 of title 11 applies,

the bankruptcy estate’s gross income includes, as described

above, (a) the debtor’s earnings from services performed

after the beginning of the case, and (b) the income from

property acquired after the beginning of the case.

The income from property owned by the debtor when the

case began is also included in the bankruptcy estate’s gross

income. However, if this property is exempted from the

bankruptcy estate or is abandoned by the trustee or

debtor-in-possession, the income from the property isn’t

included in the bankruptcy estate’s gross income. Also

included in income is gain from the sale of the bankruptcy

estate’s property. To figure gain, the trustee or

debtor-in-possession must determine the correct basis of the

property.

To determine whether any amount paid or incurred by the

bankruptcy estate is allowable as a deduction or credit, or is

treated as wages for employment tax purposes, treat the

amount as if it were paid or incurred by the individual debtor

in the same trade or business or other activity the debtor

engaged in before the bankruptcy proceedings began.

Administrative expenses. The bankruptcy estate is

allowed a deduction for any administrative expense allowed

under section 503 of title 11 of the U.S. Code, and any fee or

charge assessed under chapter 123 of title 28 of the U.S.

Code, to the extent not disallowed under an Internal Revenue

Code provision (for example, section 263, 265, or 275).

Bankruptcy administrative expenses and fees, including

accounting fees, attorney fees, and court costs, are

deductible on Schedule 1 (Form 1040), Part II, line 24z, as

allowable in arriving at AGI because they would not have

been incurred if property had not been held by the

bankruptcy estate. See section 67(e) and Final Regulations TD9918.

Administrative expenses of the bankruptcy estate

attributable to conducting a trade or business or for the

production of estate rents or royalties are deductible in

arriving at AGI on Schedules C, E, and F (Form 1040).

Administrative expense loss. When figuring an NOL,

nonbusiness deductions (including administrative expenses)

are limited under section 172(d)(4) to the bankruptcy estate’s

nonbusiness income. The excess nonbusiness deductions

are an administrative expense loss that may be carried back

to each of the 3 preceding tax years and forward to each of

the 7 succeeding tax years of the bankruptcy estate. The

amount of an administrative expense loss that may be carried

to any tax year is determined after the NOL deductions

allowed for that year. An administrative expense loss is

allowed only to the bankruptcy estate and can’t be carried to

any tax year of the individual debtor.

Carryback of NOLs and credits.

If the bankruptcy estate itself incurs an NOL (apart from

losses carried forward to the estate from the individual

debtor), it can carry back its NOLs not only to previous tax

Instructions for Form 1041 (2025)

years of the bankruptcy estate, but also to tax years of the

individual debtor prior to the year in which the bankruptcy

proceedings began.

Excess credits, such as the foreign tax credit, may also be

carried back to pre-bankruptcy years of the individual debtor.

Caution: Generally, an NOL arising in a tax year beginning

in 2021 or later may not be carried back and instead must be

carried forward indefinitely. However, farming losses arising

in tax years beginning in 2021 or later may be carried back 2

years and carried forward indefinitely. See the Instructions for

Form 172; and Pub. 225, Farmer’s Tax Guide, for more

information.

Standard deduction. A bankruptcy estate that doesn’t

itemize deductions is allowed a standard deduction of

$15,750 for tax year 2025.

Discharge of indebtedness. In a title 11 case, gross

income doesn’t include amounts that would normally be

included in gross income resulting from the discharge of

indebtedness. However, any amounts excluded from gross

income must be applied to reduce certain tax attributes in a

certain order. Attach Form 982 to show the reduction of tax

attributes.

Tax Rate Schedule

Figure the tax for the bankruptcy estate using the tax rate

schedule below. Enter the tax on Form 1040 or 1040-SR,

line 16.

If taxable income is:

Over—

But not over

—

The tax is:

$0

11,925

48,475

103,350

197,300

250,525

375,800

$11,925

48,475

103,350

197,300

250,525

375,800

......

10%

$1,192.50 + 12%

5,578.50 + 22%

17,651.00 + 24%

40,199.00 + 32%

57,231.00 + 35%

101,077.25 + 37%

Of the

amount over

—

$0

11,925

48,475

103,350

197,300

250,525

375,800

Prompt Determination of Tax Liability

To request a prompt determination of the tax liability of the

bankruptcy estate, the trustee or debtor-in-possession must

file a written request for the determination with the IRS. The

request must be submitted in duplicate and executed under

penalties of perjury. The request must include a statement

indicating that it is a request for prompt determination of tax

liability and (a) the return type, and all the tax periods for

which prompt determination is sought; (b) the name and

location of the office where the return was filed; (c) the

debtor’s name; (d) the debtor’s SSN, TIN, or EIN; (e) the type

of bankruptcy estate; (f) the bankruptcy case number; and (g)

the court where the bankruptcy is pending. Send the request

to the Centralized Insolvency Operation, P.O. Box 7346,

Philadelphia, PA 19101-7346 (marked “Request for Prompt

Determination”).

The IRS will notify the trustee or debtor-in-possession

within 60 days from receipt of the request if the return filed by

the trustee or debtor-in-possession has been selected for

examination or has been accepted as filed. If the return is

selected for examination, it will be examined as soon as

17

possible. The IRS will notify the trustee or

debtor-in-possession of any tax due within 180 days from

receipt of the request or within any additional time permitted

by the bankruptcy court.

See Rev. Proc. 2006-24, 2006-22 I.R.B. 943, available at

IRS.gov/irb/2006-22_IRB/ar12.html, modified by

Announcement 2011-77, available at IRS.gov/irb/

2011-51_IRB/ar13.

Special Filing Instructions for Bankruptcy Estates

Use Form 1041 only as a transmittal for Form 1040 or

1040-SR. In the top margin of Form 1040 or 1040-SR, enter

“Attachment to Form 1041. DO NOT DETACH.” Attach Form

1040 or 1040-SR to Form 1041. Complete only the

identification area at the top of Form 1041. Enter the name of

the individual debtor in the following format: “John Q. Public

Bankruptcy Estate.” Beneath, enter the name of the trustee in

the following format: “Avery Snow, Trustee.” In item D, enter

the date the petition was filed or the date of conversion to a

chapter 7 or 11 case.

Enter on Form 1041, line 24, the total tax from line 24 of

Form 1040 or 1040-SR. Complete lines 25 through 30 of

Form 1041, and sign and date it.

In a chapter 11 case, the bankruptcy estate’s gross

income may be affected by section 1115 or 1186 of title 11 of

the U.S. Code. See Income, Deductions, and Credits, earlier.

The debtor may receive a Form W-2, 1099-INT, 1099-DIV,

1099-MISC, or 1099-NEC or other information return

reporting wages or other income to the debtor for the entire

year, even though some or all of this income is includible in

the bankruptcy estate’s gross income under section 1115 of

title 11 of the U.S. Code. If this happens, the income reported

to the debtor on the Form W-2 or 1099, or other information

return (and the withheld income tax shown on these forms)

must be reasonably allocated between the debtor and the

bankruptcy estate. The debtor-in-possession (or the

chapter 11 trustee, if one was appointed) must attach a

schedule that shows (a) all the income reported on the Form

W-2, Form 1099, or other information return; (b) the portion of

this income includible in the bankruptcy estate’s gross

income; and (c) all the withheld income tax, if any, and the

portion of withheld tax reasonably allocated to the bankruptcy

estate. Also, the debtor-in-possesion (or the chapter 11

trustee, if one was appointed) must attach a copy of the Form

W-2, if any, issued to the debtor for the tax year if the Form

W-2 reports wages to the debtor and some or all of the

wages are includible in the bankruptcy estate’s gross income

because of section 1115 of title 11 of the U.S. Code. For

more details, including acceptable allocation methods, see

Notice 2006-83, 2006-40 I.R.B. 596, available at IRS.gov/irb/

2006-40_IRB/ar12.html.

Specific Instructions

Name of Estate or Trust

Copy the exact name of the estate or trust from the Form

SS-4, Application for Employer Identification Number, that

you used to apply for the EIN. If the name of the trust was

changed during the tax year for which you are filing, enter the

trust’s new name and check the “Change in trust’s name” box

in item F.

18

If a grantor type trust (discussed later), enter the name,

identification number, and address of the grantor(s) or other

owner(s) in parentheses after the name of the trust.

Name and Title of Fiduciary

Enter the name and title of the fiduciary. If the name entered

is different from the name on the prior year’s return, see

Change in Fiduciary’s Name and Change in Fiduciary, later.

Address

Include the suite, room, or other unit number after the street

address. If the post office doesn’t deliver mail to the street

address and the fiduciary has a P.O. box, show the box

number instead.

If you want a third party (such as an accountant or an

attorney) to receive mail for the estate or trust, enter on the

street address line “C/O” followed by the third party’s name

and street address or P.O. box.

If the estate or trust has had a change of address

(including a change to an “in care of” name and address) and

did not file Form 8822-B, Change of Address or Responsible

Party — Business, check the “Change in fiduciary’s address”

box in item F.

If the estate or trust has a change of mailing address

(including a new "in care of" name and address) or

responsible party after filing its return, file Form 8822-B to

notify the IRS of the change.

A. Type of Entity

Check the appropriate box(es) that describes the entity for

which you are filing the return.

In some cases, more than one box is checked. Check all

boxes that apply to your trust. For example, if only a portion of

a trust is a grantor type trust or if only a portion of an ESBT is

the S portion, then more than one box is checked.

Note: Determination of entity status is made on an annual

basis.

Caution: There are special reporting requirements for

grantor type trusts, pooled income funds, ESBTs, and

bankruptcy estates. See Special Reporting Instructions,

earlier.

Decedent’s Estate

An estate of a deceased person is a taxable entity separate

from the decedent. It generally continues to exist until the

final distribution of the assets of the estate is made to the

heirs and other beneficiaries. The income earned from the

property of the estate during the period of administration or

settlement must be accounted for and reported by the estate.

Simple Trust

A trust may qualify as a simple trust if:

1. The trust instrument requires that all income must be

distributed currently;

2. The trust instrument doesn’t provide that any amounts

are to be paid, permanently set aside, or used for charitable

purposes; and

3. The trust doesn’t distribute amounts allocated to the

corpus of the trust.

Complex Trust

A complex trust is any trust that doesn’t qualify as a simple

trust as explained above.

Qualified Disability Trust

A qualified disability trust is any non-grantor trust:

1. Described in 42 U.S.C. 1396p(c)(2)(B)(iv) and

established solely for the benefit of an individual under 65

years of age who is disabled, and

2. All the beneficiaries of which are determined by the

Commissioner of Social Security to have been disabled for

some part of the tax year within the meaning of 42 U.S.C.

1382c(a)(3).

A trust will not fail to meet item 2 above just because the

trust’s corpus may revert to a person who isn’t disabled after

the trust ceases to have any disabled beneficiaries.

ESBT (S Portion Only)

The S portion of an ESBT is the portion of the trust that

consists of S corporation stock and that isn’t treated as

owned by the grantor or another person. See Electing Small

Business Trusts (ESBTs), earlier, for more information about

an ESBT.

Grantor Type Trust

A grantor type trust is a legal trust under applicable state law

that isn’t recognized as a separate taxable entity for income

tax purposes because the grantor or other substantial owners

have not relinquished complete dominion and control over

the trust.

Generally, for transfers made in trust after March 1, 1986,

the grantor is treated as the owner of any portion of a trust in

which they have a reversionary interest in either the income

or corpus therefrom, if, as of the inception of that portion of

the trust, the value of the reversionary interest is more than

5% of the value of that portion. Also, the grantor is treated as

holding any power or interest that was held by either the

grantor’s spouse at the time that the power or interest was

created or who became the grantor’s spouse after the

creation of that power or interest. See Grantor Type Trusts,

earlier, for more information.

Pre-need funeral trusts. The purchasers of pre-need

funeral services are the grantors and the owners of pre-need

funeral trusts established under state laws. See Rev. Rul.

87-127, 1987-2 C.B. 156. However, the trustees of pre-need

funeral trusts can elect to file the return and pay the tax for

qualified funeral trusts. For more information, see Form

1041-QFT.

Nonqualified deferred compensation plans. Taxpayers

may adopt and maintain grantor trusts in connection with

nonqualified deferred compensation plans (sometimes

referred to as “rabbi trusts”). Rev. Proc. 92-64, 1992-2 C.B.

422, provides a “model grantor trust” for use in rabbi trust

arrangements. The procedure also provides guidance for

requesting rulings on the plans that use these trusts.

QSSTs. The beneficiary of a QSST is treated as the

substantial owner of that portion of the trust which consists of

stock in an S corporation for which an election under section

1361(d)(2) has been made. See QSSTs, earlier.

Instructions for Form 1041 (2025)

Bankruptcy Estate

A chapter 7 or 11 bankruptcy estate is a separate and distinct

taxable entity from the individual debtor for federal income

tax purposes. See Bankruptcy Estates, earlier.

For more information, see section 1398 and Pub. 908.

Pooled Income Fund

A pooled income fund is a split-interest trust with a remainder

interest for a public charity and a life income interest retained

by the donor or for another person. The property is held in a

pool with other pooled income fund property and doesn’t

include any tax-exempt securities. The income for a retained

life interest is figured using the yearly rate of return earned by

the trust. See section 642(c) and the related regulations for

more information.

B. Number of Schedules K-1 Attached

Every trust or decedent’s estate claiming an income

distribution deduction on page 1, line 18, must enter the

number of Schedules K-1 (Form 1041) that are attached to

Form 1041.

C. Employer Identification Number

Every estate or trust that is required to file Form 1041 must

have an EIN. An EIN may be applied for in the following ways.

• Online at IRS.gov/EIN. The EIN is issued immediately

once the application information is validated.

• By mailing or faxing Form SS-4.

If the estate or trust hasn’t received its EIN by the time the

return is due, enter “Applied for” and the date you applied in

the space for the EIN. For more details, see Pub. 583,

Starting a Business and Keeping Records.

D. Date Entity Created

Enter the date the trust was created or, if a decedent’s estate,

the date of the decedent’s death.

E. Nonexempt Charitable and

Split-Interest Trusts

Section 4947(a)(1) Trust

Check this box if the trust is a nonexempt charitable trust

within the meaning of section 4947(a)(1).

A nonexempt charitable trust is a trust:

• That isn’t exempt from tax under section 501(a);

• In which all of the unexpired interests are devoted to one or

more charitable purposes described in section 170(c)(2)(B);

and

• For which a deduction was allowed under section 170 (for

individual taxpayers) or similar Code section for personal

holding companies, foreign personal holding companies, or

estates or trusts (including a deduction for estate or gift tax

purposes).

Nonexempt charitable trust treated as a private foundation. If a nonexempt charitable trust is treated as though it

were a private foundation under section 509, then the

fiduciary must file Form 990-PF, Return of Private

Foundation, in addition to Form 1041.

If a nonexempt charitable trust is treated as though it were

a private foundation, and it has no taxable income under

subtitle A, it may check the box on Form 990-PF, Part VI-A,

line 15, and enter the tax-exempt interest received or accrued

19

during the year on that line, instead of filing Form 1041 to

meet its section 6012 filing requirement for that tax year.

Excise taxes. If a nonexempt charitable trust is treated as

a private foundation, then it is subject to the same excise

taxes under chapters 41 and 42 that a private foundation is

subject to. If the nonexempt charitable trust is liable for any of

these taxes (except the section 4940 tax), then it reports

these taxes on Form 4720. Taxes paid by the trust on Form

4720 or on Form 990-PF (the section 4940 tax) can’t be

taken as a deduction on Form 1041.

Not a Private Foundation

Check this box if the nonexempt charitable trust (section

4947(a)(1)) isn’t treated as a private foundation under section

509. For more information, see Regulations section

53.4947-1.

Other returns that must be filed. If a nonexempt charitable

trust isn’t treated as though it were a private foundation, the

fiduciary must file Form 990, Return of Organization Exempt

From Income Tax; or Form 990-EZ, Short Form Return of

Organization Exempt From Income Tax, in addition to Form

1041, if the trust meets the filing requirements for either of

those forms.

If a nonexempt charitable trust isn’t treated as though it

were a private foundation, and it has no taxable income

under subtitle A, it may answer “Yes” on Form 990, Part V,

line 12a, and enter the tax-exempt interest received or

accrued during the year on Form 990, Part V, line 12b,

instead of filing Form 1041 to meet its section 6012 filing

requirement for that tax year (or if Form 990-EZ is filed

instead of Form 990, you may check the box on Form

990-EZ, line 43, and enter the tax-exempt interest received or

accrued during the year on that line).

Section 4947(a)(2) Trust

Check this box if the trust is a split-interest trust described in

section 4947(a)(2).

A split-interest trust is a trust that:

• Isn’t exempt from tax under section 501(a);

• Has some unexpired interests that are devoted to

purposes other than religious, charitable, or similar purposes

described in section 170(c)(2)(B); and

• Has amounts transferred in trust after May 26, 1969, for

which a deduction was allowed under section 170 (for

individual taxpayers) or similar Code sections for personal

holding companies, foreign personal holding companies, or

estates or trusts (including a deduction for estate or gift tax

purposes).

Other returns that must be filed. The fiduciary of a

split-interest trust must file Form 5227. However, see the

Instructions for Form 5227 for the exception that applies to

split-interest trusts other than section 664 CRTs.

F. Initial Return, Amended Return, etc.

Amended Return

If you are filing an amended Form 1041:

• Check the “Amended return” box in item F,

• Complete the entire return,

• Correct the appropriate lines with the new information, and

• Refigure the estate’s or trust’s tax liability.

Note: If you are amending the return for an NOL

carryback, also check the “Net operating loss carryback” box

in item F.

20

If the total tax on line 24 is larger on the amended return

than on the original return, you should generally pay the

difference with the amended return. However, you should

adjust this amount if there is any increase or decrease in the

total payments shown on line 26.

Attach a sheet that explains the reason for the

amendments and identifies the lines and amounts being

changed on the amended return.

Amended Schedule H (Form 1040). If you discover an

error on a Schedule H (Form 1040), Household Employment

Taxes, that you previously filed with Form 1041, file an

“Amended” Form 1041 and attach a corrected Schedule H.

In the top margin of your corrected Schedule H, enter

“CORRECTED” and the date you discovered the error. Also,

on an attachment, explain the reason for your correction. If

you owe tax, pay the tax in full with your amended Form

1041. If you overpaid tax on a previously filed Schedule H,

depending on whether you choose the adjustment or claim

for refund process to correct the error, you must either repay

or reimburse the employee’s share of social security and

Medicare taxes or get the employee’s consent to the filing of

a refund claim for their share. See Pub. 926, Household

Employer’s Tax Guide, for more information.

Amended Schedule K-1 (Form 1041). If the amended

return results in a change to income, or a change in

distribution of any income or other information provided to a

beneficiary, an amended Schedule K-1 (Form 1041) must

also be filed with the amended Form 1041 and given to each

beneficiary. Check the “Amended K-1” box at the top of the

amended Schedule K-1.

Final Return

Check this box if this is a final return because the estate or

trust has terminated. Also, check the “Final K-1” box at the

top of Schedule K-1.

If, on the final return, there are excess deductions, an

unused capital loss carryover, or an NOL carryover, see the

instructions for box 11 of Schedule K-1, later.

Change in Trust’s Name

If the name of the trust has changed from the name shown on

the prior year’s return (or Form SS-4 if this is the first return

being filed), be sure to check this box.

Change in Fiduciary

If a different fiduciary enters their name on the line for “Name

and title of fiduciary” than was shown on the prior year’s

return (or Form SS-4 if this is the first return being filed) and

you didn’t file a Form 8822-B, be sure to check this box. If

there is a change in the fiduciary whose address is used as

the mailing address for the estate or trust after the return is

filed, use Form 8822-B to notify the IRS.

Change in Fiduciary’s Name

If the fiduciary changed their name from the name they

entered on the prior year’s return (or Form SS-4 if this is the

first return being filed), be sure to check this box.

Change in Fiduciary’s Address

If the same fiduciary who filed the prior year’s return (or Form

SS-4 if this is the first return being filed) files the current

year’s return and changed the address on the return

(including a change to an "in care of" name and address),

and didn’t report the change on Form 8822-B, check this box.

Instructions for Form 1041 (2025)

If the address shown on Form 1041 changes after you file

the form (including a change to an "in care of" name and

address), file Form 8822-B to notify the IRS of the change.

G. Section 645 Election

If a section 645 election was made by filing Form 8855, check

the box in item G(1). See Special Rule for Certain Revocable

Trusts under Who Must File, earlier, and Form 8855 for more

information about this election.

Income

Determining Qualified Business Income (QBI)

The estate’s or trust’s QBI includes items of income, gain,

deduction, and loss that are effectively connected with the

conduct of a trade or business within the United States and

included or allowed in determining taxable income for the

year. This includes the estate’s or trust’s share of items of

income, gain, deduction, and loss from trades or business

conducted by partnerships (other than publicly traded

partnerships (PTPs)), S corporations, and other estates or

trusts. For more information, see section 199A, the

Instructions for Form 8995, and the Instructions for Form

8995-A.

Special Rule for Blind Trust

If you are reporting income from a qualified blind trust (under

the Ethics in Government Act of 1978), don’t identify the

payer of any income to the trust but complete the rest of the

return as provided in the instructions. Also enter “Blind Trust”

at the top of page 1.

Extraterritorial Income Exclusion

The extraterritorial income exclusion isn’t allowed for

transactions after 2006. However, income from certain

long-term sales and leases may still qualify for the exclusion.

For details and to figure the amount of the exclusion, see

Form 8873, Extraterritorial Income Exclusion, and its

separate instructions. The estate or trust must report the

extraterritorial income exclusion on line 15a of Form 1041,

page 1.

Although the extraterritorial income exclusion is entered

on line 15a, it is an exclusion from income and should be

treated as tax-exempt income when completing other parts of

the return.

Line 1—Interest Income

Report the estate’s or trust’s share of all taxable interest

income that was received during the tax year. Examples of

taxable interest include interest from:

• Accounts (including certificates of deposit and money

market accounts) with banks, credit unions, and thrift

institutions;

• Notes, loans, and mortgages;

• U.S. Treasury bills, notes, and bonds;

• U.S. savings bonds;

• Original issue discount; and

• Income received as a regular interest holder of a real

estate mortgage investment conduit (REMIC).

For taxable bonds acquired after 1987, amortizable bond

premium is treated as an offset to the interest income instead

of as a separate interest deduction. See Pub. 550.

For the year of the decedent’s death, Forms 1099-INT

issued in the decedent’s name may include interest income

earned after the date of death that should be reported on the

Instructions for Form 1041 (2025)

income tax return of the decedent’s estate. When preparing

the decedent’s final income tax return, report on Schedule B

(Form 1040), line 1, the total interest shown on Form

1099-INT. Under the last entry on line 1, subtotal all the

interest reported on line 1. Below the subtotal, enter “Form

1041” and the name and address shown on Form 1041 for

the decedent’s estate. Also, show the part of the interest

reported on Form 1041 and subtract it from the subtotal.

Line 2a—Total Ordinary Dividends

Report the estate’s or trust’s share of all ordinary dividends

received during the tax year.

For the year of the decedent’s death, Forms 1099-DIV

issued in the decedent’s name may include dividends earned

after the date of death that should be reported on the income

tax return of the decedent’s estate. When preparing the

decedent’s final income tax return, report on Schedule B

(Form 1040), line 5, the ordinary dividends shown on Form

1099-DIV. Under the last entry on line 5, subtotal all the

dividends reported on line 5. Below the subtotal, enter “Form

1041” and the name and address shown on Form 1041 for

the decedent’s estate. Also, show the part of the ordinary

dividends reported on Form 1041 and subtract it from the

subtotal.

Tip: Report capital gain distributions on Schedule D (Form

1041), line 13.

Line 2b—Qualified Dividends

Enter the beneficiary’s allocable share of qualified dividends

on line 2b(1) and enter the estate’s or trust’s allocable share

on line 2b(2).

If the estate or trust received qualified dividends that were

derived from IRD, you must reduce the amount on line 2b(2)

by the portion of the estate tax deduction claimed on Form

1041, page 1, line 19, that is attributable to those qualified

dividends. Don’t reduce the amounts on line 2b by any other

allocable expenses.

Note: The beneficiary’s share (as figured above) may differ

from the amount entered in box 2b of Schedule K-1 (Form

1041).

Qualified dividends. Qualified dividends are eligible for a

lower tax rate than other ordinary income. Generally, these

dividends are reported to the estate or trust in box 1b of

Form(s) 1099-DIV. See Pub. 550 for the definition of qualified

dividends if the estate or trust received dividends not

reported on Form 1099-DIV.

Exception. Some dividends may be reported to the estate

or trust as in box 1b of Form 1099-DIV but aren’t qualified

dividends. These include the following.

• Dividends received on any share of stock that the estate or

trust held for less than 61 days during the 121-day period that

began 60 days before the ex-dividend date. The ex-dividend

date is the first date following the declaration of a dividend on

which the purchaser of a stock isn’t entitled to receive the

next dividend payment. When counting the number of days

the stock was held, include the day the estate or trust

disposed of the stock but not the day it acquired the stock.

However, you can’t count certain days during which the

estate’s or trust’s risk of loss was diminished. See Pub. 550

for more details.

• Dividends attributable to periods totaling more than 366

days that the estate or trust received on any share of

preferred stock held for less than 91 days during the 181-day

period that began 90 days before the ex-dividend date. When

21

counting the number of days the stock was held, include the

day the estate or trust disposed of the stock but not the day it

acquired the stock. However, you can’t count certain days

during which the estate’s or trust’s risk of loss was

diminished. See Pub. 550 for more details. Preferred

dividends attributable to periods totaling less than 367 days

are subject to the 61-day holding period rule above.

• Dividends on any share of stock to the extent that the

estate or trust is under an obligation (including a short sale)

to make related payments with respect to positions in

substantially similar or related property.

• Payments in lieu of dividends, but only if you know or have

reason to know that the payments are not qualified dividends.

Tip: If you have an entry on line 2b(2), be sure you use

Schedule D (Form 1041), the Schedule D Tax Worksheet, or

the Qualified Dividends Tax Worksheet, whichever applies, to

figure the estate’s or trust’s tax. Figuring the estate’s or trust’s

tax liability in this manner will usually result in a lower tax.

Line 3—Business Income or (Loss)

If the estate operated a business, report the income and

expenses on Schedule C (Form 1040), Profit or Loss From

Business. Enter the net profit or (loss) from Schedule C on

line 3.

Line 4—Capital Gain or (Loss)

Enter the gain from column (3) of Schedule D (Form 1041),

Part III, line 19, or the loss from Part IV, line 20.

If you deferred a capital gain into a QOF, you must file your

return with Schedule D, Form 8949, and Form 8997 attached.

You will need to file Form 8997 annually until you dispose of

the investment. See the Form 8997 instructions.

Caution: Don’t substitute Schedule D (Form 1040) for

Schedule D (Form 1041).

Line 5—Rents, Royalties, Partnerships, Other

Estates and Trusts, etc.

Use Schedule E (Form 1040), Supplemental Income and

Loss, to report the estate’s or trust’s share of income or

(losses) from rents, royalties, partnerships, S corporations,

other estates and trusts, and REMICs. Also use Schedule E

(Form 1040) to report farm rental income and expenses

based on crops or livestock produced by a tenant. Enter the

net profit or (loss) from Schedule E on line 5. See the

Instructions for Schedule E (Form 1040) for reporting

requirements.

If the estate or trust received a Schedule K-1 from a

partnership, an S corporation, or other flow-through entity,

use the corresponding lines on Form 1041 to report the

interest, dividends, capital gains, etc., from the flow-through

entity.

Line 6—Farm Income or (Loss)

If the estate or trust operated a farm, use Schedule F (Form

1040), Profit or Loss From Farming, to report farm income

and expenses. Enter the net profit or (loss) from Schedule F

on line 6.

Caution: If an estate or trust has farm rental income and

expenses based on crops or livestock produced by a tenant,

report the income and expenses on Schedule E (Form 1040).

Don’t use Form 4835, Farm Rental Income and Expenses, or

Schedule F (Form 1040) to report such income and

expenses and don’t include the net profit or (loss) from such

income and expenses on line 6.

22

Line 7—Ordinary Gain or (Loss)

Enter from line 17 of Form 4797, Sales of Business Property,

the ordinary gain or loss from the sale or exchange of

property other than capital assets and also from involuntary

conversions (other than casualty or theft).

Line 8—Other Income

Enter other items of income not included on lines 1, 2a, and 3

through 7. List the type and amount on an attached schedule

if the estate or trust has more than one item.

Items to be reported on line 8 include the following.

• Unpaid compensation received by the decedent’s estate

that is IRD.

• Any part of a total distribution shown on Form 1099-R,

Distributions From Pensions, Annuities, Retirement or

Profit-Sharing Plans, IRAs, Insurance Contracts, etc., that is

treated as ordinary income. For more information, see Form

4972, Tax on Lump-Sum Distributions, and its instructions.

• Taxable contributions received during the tax year by an

Alaska Native Settlement Trust from an Alaska Native

Corporation. Report gain from taxable contributions of

noncash property on Schedule D (Form 1041).

Note: Beginning in tax year 2021, there is no current-year

section 965(a) income inclusion reported on line 8. However,

see the instructions for Schedule G, Part I, line 8, later, for

information about a triggering event for a section 965(i) net

tax liability.

Deductions

Depreciation, Depletion, and Amortization

A trust or decedent’s estate is allowed a deduction for

depreciation, depletion, and amortization only to the extent

the deductions aren’t apportioned to the beneficiaries. An

estate or trust isn’t allowed to make an election under section

179 to expense depreciable business assets.

The estate’s or trust’s share of depreciation, depletion,

and amortization is generally reported on the appropriate

lines of Schedule C, E, or F (Form 1040), the net income or

loss from which is shown on line 3, 5, or 6 of Form 1041. If

the deduction isn’t related to a specific business or activity,

then report it on line 15a.

Depreciation. For a decedent’s estate, the depreciation

deduction is apportioned between the estate and the heirs,

legatees, and devisees on the basis of the estate’s income

allocable to each.

For a trust, the depreciation deduction is apportioned

between the income beneficiaries and the trust on the basis

of the trust income allocable to each, unless the governing

instrument (or local law) requires or permits the trustee to

maintain a depreciation reserve. If the trustee is required to

maintain a reserve, the deduction is first allocated to the trust,

up to the amount of the reserve. Any excess is allocated

among the income beneficiaries and the trust in the same

manner as the trust’s accounting income. See Regulations

section 1.167(h)-1(b).

Depletion. For mineral or timber property held by a

decedent’s estate, the depletion deduction is apportioned

between the estate and the heirs, legatees, and devisees on

the basis of the estate’s income from such property allocable

to each.

For mineral or timber property held in trust, the depletion

deduction is apportioned between the income beneficiaries

Instructions for Form 1041 (2025)

and the trust based on the trust income from such property

allocable to each, unless the governing instrument (or local

law) requires or permits the trustee to maintain a reserve for

depletion. If the trustee is required to maintain a reserve, the

deduction is first allocated to the trust, up to the amount of

the reserve. Any excess is allocated among the beneficiaries

and the trust in the same manner as the trust’s accounting

income. See Regulations section 1.611-1(c)(4).

Amortization. The deduction for amortization is apportioned

between an estate or trust and its beneficiaries under the

same principles used to apportion the deductions for

depreciation and depletion.

The deduction for the amortization of reforestation

expenditures under section 194 is allowed only to an estate.

Allocable share from a pass-through entity.

Depreciation, depletion, and amortization received from a

pass-through entity on a Schedule K-1 are apportioned and

reported in the same manner as discussed above. A section

179 expense received from a pass-through entity on a

Schedule K-1 isn’t deductible by the estate or trust.

Allocation of Deductions for Tax-Exempt Income

Generally, no deduction that would otherwise be allowable is

allowed for any expense (whether for business or for the

production of income) that is allocable to tax-exempt income.

Examples of tax-exempt income include:

• Certain death benefits (section 101),

• Interest on state or local bonds (section 103),

• Compensation for injuries or sickness (section 104), and

• Income from discharge of indebtedness in a title 11 case

(section 108).

Exception. State income taxes and business expenses that

are allocable to tax-exempt interest are deductible.

Expenses that are directly allocable to tax-exempt income

are allocated only to tax-exempt income. A reasonable

proportion of expenses indirectly allocable to both

tax-exempt income and other income must be allocated to

each class of income.

Deductions That May Be Allowable for Estate

Tax Purposes

Administration expenses and casualty and theft losses

deductible on Form 706 may be deducted, to the extent

otherwise deductible for income tax purposes, on Form 1041

if the fiduciary files a statement waiving the right to deduct

the expenses and losses on Form 706. The statement must

be filed before the expiration of the statutory period of

limitations for the tax year the deduction is claimed. See Pub.

559 for more information.

Accrued Expenses

Generally, an accrual-basis taxpayer can deduct accrued

expenses in the tax year that (a) all events have occurred that

determine the liability, and (b) the amount of the liability can

be figured with reasonable accuracy. However, all the events

that establish liability are treated as occurring only when

economic performance takes place. There are exceptions for

recurring items. See section 461(h).

Limitations on Deductions

At-Risk Loss Limitations

Generally, the amount the estate or trust has “at-risk” limits

the loss it can deduct for any tax year. Use Form 6198,

Instructions for Form 1041 (2025)

At-Risk Limitations, to figure the deductible loss for the year

and file it with Form 1041. For more information, see Pub.

925, Passive Activity and At-Risk Rules.

Passive Activity Loss and Credit Limitations

In general. Section 469 and the regulations thereunder

generally limit losses from passive activities to the amount of

income derived from all passive activities. Similarly, credits

from passive activities are generally limited to the tax

attributable to such activities. These limitations are first

applied at the estate or trust level.

Generally, an activity is a passive activity if it involves the

conduct of any trade or business, and the taxpayer does not

materially participate in the activity. Passive activities don’t

include working interests in oil and gas properties. See

section 469(c)(3).

Note: Material participation standards for estates and trusts

haven’t been established by regulations.

For a grantor trust, material participation is determined at

the grantor level.

If the estate or trust distributes an interest in a passive

activity, the basis of the property immediately before the

distribution is increased by the passive activity losses

allocable to the interest, and such losses can’t be deducted.

See section 469(j)(12).

Tip: Losses from passive activities are first subject to the

at-risk rules. When the losses are deductible under the at-risk

rules, the passive activity rules then apply.

Rental activities. Generally, rental activities are passive

activities, whether or not the taxpayer materially participates.

However, certain taxpayers who materially participate in real

property trades or businesses aren’t subject to the passive

activity limitations on losses from rental real estate activities

in which they materially participate. For more details, see

section 469(c)(7).

For tax years of an estate ending less than 2 years after

the decedent’s date of death, up to $25,000 of deductions

and deduction equivalents of credits from rental real estate

activities in which the decedent actively participated are

allowed. Any excess losses or credits are suspended for the

year and carried forward.

Portfolio income. Portfolio income isn’t treated as income

from a passive activity, and passive losses and credits

generally may not be applied to offset it. Portfolio income

generally includes interest, dividends, royalties, and income

from annuities. Portfolio income of an estate or trust must be

accounted for separately.

Forms to file. See Form 8582, Passive Activity Loss

Limitations, to figure the amount of losses allowed from

passive activities. See Form 8582-CR, Passive Activity Credit

Limitations, to figure the amount of credit allowed for the

current year.

Business Interest

Business interest expense could be limited. For more

information about limitations on deductions for business

interest, see section 163(j) and Line 10, later.

Transactions Between Related Taxpayers

Under section 267, a trust that uses the accrual method of

accounting may only deduct business expenses and interest

owed to a related party in the year the payment is included in

23

the income of the related party. For this purpose, a related

party includes:

1. A grantor and a fiduciary of any trust;

2. A fiduciary of a trust and a fiduciary of another trust, if

the same person is a grantor of both trusts;

3. A fiduciary of a trust and a beneficiary of such trust;

4. A fiduciary of a trust and a beneficiary of another trust,

if the same person is a grantor of both trusts;

5. A fiduciary of a trust and a corporation more than 50%

in value of the outstanding stock of which is owned, directly

or indirectly, by or for the trust or by or for a person who is a

grantor of the trust; and

6. An executor of an estate and a beneficiary of that

estate, except for a sale or exchange to satisfy a pecuniary

bequest (that is, a bequest of a sum of money).

Line 10—Interest

Enter the amount of interest (subject to limitations) paid or

incurred by the estate or trust on amounts borrowed by the

estate or trust, or on debt acquired by the estate or trust (for

example, outstanding obligations from the decedent) that

isn’t claimed elsewhere on the return.

If the proceeds of a loan were used for more than one

purpose (for example, to purchase a portfolio investment and

to acquire an interest in a passive activity), the fiduciary must

make an interest allocation according to the rules in

Temporary Regulations section 1.163-8T.

Don’t include interest paid on indebtedness incurred or

continued to purchase or carry obligations on which the

interest is wholly exempt from income tax.

Personal interest isn’t deductible. Examples of personal

interest include interest paid on:

• Revolving charge accounts used to purchase personal-use

property;

• Personal notes for money borrowed from a bank, a credit

union, or other person;

• Installment loans on personal-use property;

• Underpayments of federal, state, or local income taxes;

and

• Certain loans used to purchase vehicles for personal use.

See Qualified passenger vehicle loan interest deduction,

later.

Interest that is paid or incurred on indebtedness allocable

to a trade or business (including a rental activity) should be

deducted on the appropriate line of Schedule C, E, or F

(Form 1040), the net income or loss from which is shown on

line 3, 5, or 6 of Form 1041.

Types of interest to include on line 10 are:

1. Any investment interest (subject to limitations—see

below),

2. Any qualified residence interest (see later), and

3. Any interest payable under section 6601 on any unpaid

portion of the estate tax attributable to the value of a

reversionary or remainder interest in property for the period

during which an extension of time for payment of such tax is

in effect.

Limitation on deduction of business interest. Business

interest expense is limited to the sum of business interest

income, 30% of the adjusted taxable income, and floor plan

financing interest. Business interest expense includes any

interest paid or accrued on indebtedness properly allocable

24

to a trade or business. A taxpayer, other than a tax shelter,

that meets the gross receipts test is not required to limit

business interest expense under section 163(j). A taxpayer

meets the gross receipts test if the taxpayer has average

annual gross receipts of $31 million or less for the 3 prior tax

years. Gross receipts include the aggregate gross receipts

from all persons treated as a single employer such as a

controlled group of corporations, commonly controlled

partnerships or proprietorships, and affiliated service groups.

If the taxpayer fails to meet the gross receipts test, Form

8990 is generally required.

Investment interest. Generally, investment interest is

interest (including amortizable bond premium on taxable

bonds acquired after October 22, 1986, but before January 1,

1988) that is paid or incurred on indebtedness that is properly

allocable to property held for investment. Investment interest

doesn’t include any qualified residence interest, or interest

that is taken into account under section 469 in figuring

income or loss from a passive activity.

Generally, net investment income (NII) is the excess of

investment income over investment expenses. Investment

expenses (other than interest) are deductible only to the

extent they are allowable under section 67(e).

The amount of the investment interest deduction may be

limited. Use Form 4952, Investment Interest Expense

Deduction, to figure the allowable investment interest

deduction.

If you must complete Form 4952, check the box on line 10

of Form 1041 and attach Form 4952. Then, add the

deductible investment interest to the other types of

deductible interest and enter the total on line 10.

Qualified residence interest. Interest paid or incurred by

an estate or trust on indebtedness secured by a qualified

residence of a beneficiary of an estate or trust is treated as

qualified residence interest if the residence would be a

qualified residence (that is, the principal residence or the

secondary residence selected by the beneficiary) if owned by

the beneficiary. The beneficiary must have a present interest

in the estate or trust or an interest in the residuary of the

estate or trust. See Pub. 936, Home Mortgage Interest

Deduction, for an explanation of the general rules for

deducting home mortgage interest.

See section 163(h)(3) for a definition of qualified

residence interest and for limitations on indebtedness.

Qualified passenger vehicle loan interest deduction.

Non-grantor trusts and decedents’ estates may be able to

claim a deduction for qualified passenger vehicle loan

interest (QPVLI) (see Qualified passenger vehicle loan

interest, later) paid or accrued in 2025. In the case of a

grantor trust, the eligibility of the grantor trust’s deemed

owner to deduct the interest paid by the grantor trust as

QPVLI is determined by disregarding the grantor trust and

instead looking to the deemed owner to test whether all of the

requirements for deductible QPVLI have been satisfied.

VIN required on the return. In order to take the QPVLI

deduction, the non-grantor trust or decedent’s estate must

attach a statement to its Form 1041 with the vehicle

identification number (VIN) of the purchased applicable

passenger vehicle (APV) (see Applicable passenger vehicle,

later). If the non-grantor trust or decedent’s estate paid

QPVLI allocable to multiple APVs, include the VIN of each

APV.

Instructions for Form 1041 (2025)

If the purchased APV was replaced due to an unforeseen

intervening event as described in Proposed Regulations

section 1.163-16(c)(3)(ii), include the VIN of the substitute

APV.

Maximum amount of deduction. A non-grantor trust or

decedent’s estate can’t deduct more than $10,000 of QPVLI

paid or accrued in 2025. The amount of the QPVLI deduction

(after applying the $10,000 limit) is reduced if the AGI of the

non-grantor trust or decedent’s estate is greater than

$100,000.

To determine the AGI of the non-grantor trust or

decedent’s estate, see Adjusted gross income (AGI), earlier.

Complete the No Tax on Car Loan Interest Worksheet to

determine the amount of the QPVLI deduction.

Qualified passenger vehicle loan interest (QPVLI).

QPVLI is interest paid or accrued on a loan that meets all the

following requirements.

• The loan was originated after December 31, 2024.

• The loan was originated by the non-grantor trust or

decedent’s estate, or the non-grantor trust or decedent’s

estate became the obligor on the loan by reason of the

previous obligor’s death (see Change in obligor by reason of

previous obligor’s death, later).

• The proceeds from the loan were used to purchase an

APV. Lease payments do not qualify.

• The APV is for personal use (not expected to be used

predominantly for business or commercial use; see Personal

use, later).

• The loan is secured by a first lien on the purchased APV.

Change in obligor by reason of previous obligor’s

death. If a loan that met these requirements at the time it

was originated by a previous obligor, and the non-grantor

trust or decedent’s estate became the obligor by reason of a

previous obligor’s death, interest paid by the non-grantor trust

or decedent’s estate on the loan is generally QPVLI if the

loan continues to be secured by a first lien on the purchased

APV. A change in obligor by reason of a previous obligor’s

death could occur, for example, when a decedent’s estate

succeeds to ownership of a decedent’s APV subject to a loan

originated by the decedent. See Proposed Regulations

section 1.163-16(d)(5). See Schedule 1-A (Form 1040) for

the eligibility criteria applicable to an individual.

Loan amount. Indebtedness that can be counted for

purposes of determining QPVLI includes indebtedness

incurred to finance the purchase price of the APV, as well as

items or amounts that are customarily financed in an APV

purchase transaction and that are directly related to the

purchased APV. For example, this includes vehicle service

plans, extended warranties, sales tax, and vehicle-related

fees. Interest on items and services not customarily financed

in an APV purchase transaction and that are directly related

to the purchased APV, such as liability insurance, a trailer, or

amounts representing debt on a vehicle traded in as part of

the purchase transaction for the APV (so-called negative

equity), is not eligible for the deduction.

Refinanced loan. If the non-grantor trust or decedent’s

estate prior loan that had QPVLI is later refinanced, interest

paid on the refinanced amount is generally eligible for the

deduction, so long as the new loan is secured by a first lien

on the APV with respect to which the refinanced loan was

incurred. The loan amount is limited to the outstanding

balance of the refinanced loan as of the date of the

refinancing.

Instructions for Form 1041 (2025)

Applicable passenger vehicle. In general, an APV is any

vehicle that meets the following conditions.

• The original use of the vehicle starts with the non-grantor

trust or decedent’s estate, or, in the case of a change in

obligor by reason of the previous obligor’s death, the original

obligor (a used vehicle does not qualify).

• The vehicle is a motor vehicle manufactured primarily for

use on public streets, roads, and highways (not including a

vehicle operated exclusively on a rail or rails).

• The vehicle has at least 2 wheels.

• The vehicle is a car, minivan, van, SUV, pickup truck, or

motorcycle, and has a gross vehicle weight rating of less than

14,000 pounds.

• The vehicle has undergone final assembly in the United

States.

Final assembly in the United States. The location of final

assembly will be listed on the vehicle information label

attached to each vehicle on a dealer’s premises. Non-grantor

trusts or decedents’ estates can rely on that information label.

Non-grantor trusts or decedents’ estates can also rely on the

vehicle’s plant of manufacture as reported in the VIN to

determine whether the vehicle has undergone final assembly

in the United States. The VIN Decoder website for the

National Highway Traffic Safety Administration provides plant

of manufacture information. Non-grantor trusts or decedents’

estates can follow the instructions on that website to see if

the vehicle’s plant of manufacture is located in the United

States.

Personal use. “Personal use” means a use other than:

• Use in any trade or business (except for the use in the

trade or business of being an employee), or

• For the production of income.

A non-grantor trust or decedent’s estate is considered to

have purchased an APV for personal use if, at the time the

non-grantor trust or decedent’s estate incurs a loan to

purchase an APV, the non-grantor trust or decedent’s estate

expects that the APV will be used for personal use for more

than 50% of the time by any combination of the following:

beneficiaries who have a present or future interest in the trust

or estate; that beneficiary’s spouse; that beneficiary’s or

spouse’s child, grandchild, great-grandchild, etc.; and that

beneficiary’s or spouse’s brother, sister, stepbrother,

stepsister, or his or her descendants.

QPVLI deducted elsewhere on Form 1041. If some of all

of the QPVLI qualifies to be deducted in more than one place

on the return, the non-grantor trust or decedent’s estate may

choose where to report the deduction, but the non-grantor

trust or decedent’s estate cannot deduct the same amount

more than once. For example, if some of the interest on the

loan is claimed as a deduction on Schedule C (Form 1040),

Schedule E (Form 1040), or Schedule F (Form 1040), that

interest cannot be claimed on line 10 as a QPVLI deduction.

Worksheet line 1. To determine the amount that should

be entered on line 1, follow the steps below.

1. Add together all interest paid or accrued in 2025 on a

vehicle loan that qualifies as QPVLI.

2. Subtract any interest on the loan that was reported

elsewhere on the return instead of on Form 1041.

3. If the amount determined after completing (1) and (2)

is greater than $10,000, enter $10,000 on line 1. If the

amount determined after completing (1) and (2) is less than

or equal to $10,000, enter that amount on line 1.

25

No Tax on Car Loan Interest Worksheet

Keep for Your Records

Computation to determine amount of the QPVLI deduction

1.

1.

2.

Enter the amount of your paid or accrued QPVLI. See instructions. Don’t enter more than

$10,000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Enter the estate’s or trust’s adjusted gross income. See instructions . . . . . . . . . . . . . . . . . . . . . . . . .

3.

Enter $100,000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3.

4.

Subtract line 3 from line 2. If zero or less, include the amount from line 1 in the entry you make on

Form 1041, line 10, Interest. If more than zero, continue to line 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Divide line 4 by $1,000. If the result isn’t a whole number, increase it to the next higher whole

number. (For example, increase 1.5 to 2 and increase 0.5 to 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Multiply line 5 by $200 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5.

6.

7.

4.

5.

6.

Qualified car loan interest deduction. Subtract line 6 from line 1. If zero or less, enter -0-. Include

this amount in the entry you make on Form 1041, line 10, Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.

Worksheet line 2. To determine the non-grantor trust’s or

decedent’s estate’s AGI, see Adjusted gross income (AGI),

earlier.

Line 11—Taxes

Caution: The maximum deduction for state and local taxes

is $40,000. This applies to the total of your state and local

income taxes (or general sales taxes, if elected instead of

income taxes), real estate taxes, and personal property

taxes. The limitation does not apply to foreign income taxes,

and state and local taxes paid or accrued in carrying on a

trade or business or for the production of income.

Complete the State and Local Tax Deduction Worksheet,

later, to see if your deduction is limited.

Worksheet line 2. To figure the estate’s or trust’s adjusted

gross income, see Adjusted gross income (AGI), earlier.

Enter any deductible taxes paid or incurred during the tax

year that aren’t deductible elsewhere on Form 1041.

Deductible taxes include the following.

• State and local income taxes. You can deduct state and

local income taxes unless you elect to deduct state and local

general sales taxes. You can’t deduct both.

• State and local general sales taxes. You can elect to

deduct state and local general sales taxes instead of state

and local income taxes. Generally, you can elect to deduct

the actual state and local general sales taxes (including

compensating use taxes) you paid in 2025 if the tax rate was

the same as the general sales tax rate. However, sales taxes

on food, clothing, medical supplies, and motor vehicles are

deductible as a general sales tax even if the tax rate was less

than the general sales tax rate. Sales taxes on motor vehicles

are also deductible as a general sales tax if the tax rate was

more than the general sales tax rate, but the tax is deductible

only up to the amount of tax that would have been imposed at

the general sales tax rate. Motor vehicles include cars,

motorcycles, motor homes, recreational vehicles, sport utility

vehicles, trucks, vans, and off-road vehicles. Also include any

state and local general sales taxes paid for a leased motor

vehicle.

Do not include sales taxes paid on items used in a trade or

business. An estate or trust cannot use the Optional State

Sales Tax Tables for individuals in the Instructions for

Schedule A (Form 1040), Itemized Deductions, to figure its

deduction.

• State and local real property taxes.

26

2.

Note: The deduction for foreign real property taxes is no

longer allowed.

• State and local personal property taxes.

• Foreign or U.S. territory income taxes. You may want to

take a credit for the tax instead of a deduction. See the

instructions for Schedule G, Part I, line 2a, later, for more

details.

• The generation-skipping transfer (GST) tax imposed on

income distributions.

Don’t deduct:

• Federal income taxes;

• Estate, inheritance, legacy, succession, and gift taxes;

• Federal duties and excise taxes; or

• Foreign real property taxes.

Safe harbor for certain charitable contributions made in

exchange for a state or local tax credit. If you made a

charitable contribution in exchange for a state or local tax

credit and your charitable contribution deduction must be

reduced as a result of receiving or expecting to receive the

tax credit, you may qualify for a safe harbor that allows you to

treat some or all of the disallowed charitable contribution as a

payment of state and local taxes. The safe harbor applies if

you meet the following conditions.

1. You made a cash contribution to an entity described in

section 170(c).

2. In return for the cash contribution, you received a state

or local tax credit.

3. You must reduce your charitable contribution

deduction by the amount of the state or local tax credit you

receive.

If you meet these conditions, and to the extent you apply the

state or local tax credit to this or a prior year’s state or local

tax liability, you may include this amount on line 11. To the

extent you apply a portion of the credit to offset your state or

local tax liability in a subsequent year (as permitted by law),

you may treat this amount as state or local tax paid in the

year the credit is applied. For more information about this

safe harbor and examples, see Notice 2019-12.

Line 12—Fiduciary Fees

Enter the deductible fees paid or incurred to the fiduciary for

administering the estate or trust during the tax year.

Instructions for Form 1041 (2025)

State and Local Tax Deduction Worksheet

Keep for Your Records

If the amount of state and local taxes is $10,000 or less, you don’t have to complete the worksheet.

1.

2.

Enter the amount of your state and local taxes. If your state and local taxes are more than $40,000,

enter $40,000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.

Enter the estate’s or trust’s adjusted gross income. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.

3.

Enter $500,000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.

4.

Is the amount on line 2 more than the amount on line 3?

No. Skip lines 5 through 7 and enter the amount from line 1 on line 8.

6.

Yes. Subtract line 3 from line 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.

Multiply line 4 by 30% (0.30) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.

Subtract the amount on line 5 from $40,000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.

7.

Enter the larger of the amount on line 6 or $10,000. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.

8.

State and local tax deduction. Enter the smaller of line 1 or line 7. Include this amount in the entry

you make on Form 1041, line 11, Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.

5.

Fiduciary expenses include probate court fees and costs,

fiduciary bond premiums, legal publication costs of notices to

creditors or heirs, the cost of certified copies of the

decedent’s death certificate, and costs related to fiduciary

accounts.

Tip: Fiduciary fees deducted on Form 706 can’t be deducted

on Form 1041.

Note: Fiduciary fees are allowable under section 67(e) if

they are costs that are paid or incurred in connection with the

administration of an estate or a non-grantor trust that would

not have been incurred if the property were not held in such

estate or trust. See Final Regulations - TD9918 and

Regulations section 1.67-4 for more information.

Line 14—Attorney, Accountant, and Return

Preparer Fees

Expenses for preparation of fiduciary income tax returns, the

decedent’s final individual income tax returns, and all estate

and GST tax returns are fully deductible. However, expenses

for preparing all other tax returns, including gift tax returns,

are considered costs commonly and customarily incurred by

individuals and are not deductible. For more information, see

Final Regulations - TD9918 and Regulations section 1.67-4.

Line 15a—Other Deductions

Attach your own statement, listing by type and amount all

allowable deductions that aren’t deductible elsewhere on

Form 1041.

Allowable deductions include all deductions listed in

section 67(b) (including estate taxes attributable to IRD under

section 691(c)), and other costs allowable under section

67(e) paid or incurred in connection with the administration of

the estate or trust that would not have been incurred if the

property were not held in the estate or trust.

Don’t include any losses on worthless bonds and similar

obligations and nonbusiness bad debts. Report these losses,

as applicable, on Form 8949.

Don’t deduct medical or funeral expenses on Form 1041.

Medical expenses of the decedent paid by the estate may be

deductible on the decedent’s income tax return for the year

Instructions for Form 1041 (2025)

incurred. See section 213(c). Funeral expenses are

deductible only on Form 706.

O

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