Question: John is a U.S. citizen who died on Nov. 17, 2024. His will names three beneficiaries to his estate, each of whom is a U.S. citizen. John’s final Form 1040, U.S. Individual Income Tax Return, will report all income attributable to him while he was alive, with the income received after death allocable to the estate. The estate’s only income for the year is $450 of taxable income from gross proceeds from the sale of stock and $200 of tax-exempt interest. Is the estate required to file Form 1041, Income Tax Return for Estates and Trusts, for its initial year?
Answer: Yes. An estate is required to file a tax return if any of the following conditions apply: (1) has gross income of $600 or more during the year; (2) has a beneficiary who is a nonresident alien; or (3) is a trust making a §645 election to be treated as part of the estate if the combined gross income of the trust and estate is $600 or more.
Although John’s estate had $450 of taxable income, its total gross income was $650 ($450 + $200), which pushes it over the $600 gross income threshold, requiring it to file Form 1041 for the year.
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Information included in this article is accurate as of the publish date. This post is not reflective of tax law changes or IRS guidance that may have occurred after the date of publishing.