Form 1041 for a Trust with supporting 1041-A for charitable donations; is it possible to e-file?

[first_time_trust_filer]

I'm exploring the effort involved in using TurboTax Business (for estates & trusts) to file one federal and one state return for a small family trust with reportable income under it's own (new) EIN for tax year 2021. This will be the ONLY year that tax returns are needed for this trust. The trust donated 10% of it's assets (from principle) to 15 charitable organizations. There are only 5 lines available on the 1041-A for this. Can such a tax return (with either 5 or 15 charitable donations listed) be e-filed? Are paper tax returns in this case more or less inevitable?

[jtax]

I just took a quick look.

It does not appear to be possible to efile the Form 1041-A. (You can get a six month extension BTW)

It does appear that you can efile the 1041 even if you need to mail in a 1041-A. But often the proof of being able to efile is very dependent upon your particular situation and you can't know for sure until you try.

I would not worry about the 5/15 lines. You have to use forms mode to fill out the 1041-a so it is trivial to right click on the amount field and choose "add supporting details"  (or control-i)

But if this is the only year you're filing this 1041, who cares? If you can't efile then just mail it in. (Send certified and keep the green receipt stamped by a USPS employee. No need for return receipt. Having that is proof of filing. (Technically it shifts the burden of proof to the IRS to produce, say, the envelope without a return in it. In practice they cannot do that.)

[ira_query]

Thanks for your time in developing that answer and especially the detail on completing the 1041-A in the software, that will be helpful, even if I have to print it anyway.

My desire to e-file was kind of naive, hoping for "closure" much sooner. The IRS is taking pretty long these days to process paper returns (though maybe they're faster with the 1041s?)

Here's another naive thought I had. Since I have to file a paper 1041 and 1041-A , why not write a one line message at the top of the 1041 to the effect of: "See SSN xxx-xx-xxxx for income reporting prior to mm/dd/2021". I'm innocently (and maybe unnecessarily) trying to be helpful to the IRS if they need to verify that income reporting occurred for these same investment assets on my mom's individual tax return for that part of 2021 up until the day she passed. I'll be filing that tax return also with TurboTax and I believe, if it's like last year (me filing for a deceased taxpayer), that TurboTax will make me print that one and mail it as well.

[jtax]

Oh, do check about the donations from principle. Trusts and Estates do not get an income tax deduction for donations from principal, only from income. And that is taxable income, not necessarily trust accounting income. See I.R.C. 642(c) -- https://www.law.cornell.edu/uscode/text/26/642

This is a super complicated area. You really should get the professional advice of a CPA, EA, or tax attorney. Especially if the amounts are large.

[jtax]

@ira_query sorry for your loss.

>My desire to e-file was kind of naive, hoping for "closure" much sooner.

>The IRS is taking pretty long these days to process paper returns

>(though maybe they're faster with the 1041s?)

Good point. I would expect them to be slower with 1041s. I don't think they pay much attention to 1041s.

>Here's another naive thought I had. Since I have to file a paper 1041 and 1041-A ,

>why not write a one line message at the top of the 1041 to the effect of:

>"See SSN xxx-xx-xxxx for income reporting prior to mm/dd/2021".

You can always do that. It won't matter unless the return is selected for audit and a real person looks at it. Not likely. And if it happened would probably take years.

Was the income reported to your mom's SSN? Or do the 1099s for her SSN only go through the date of her death and then to the trust/estate's EIN?

If money was reported on your mother's SSN that should be on the trust/estate's 1041, I believe you are supposed to issue a 1099-DIV (or whatever) from your mother to the trust/estate. That's what tells the IRS. 

You enter the whole amount (as shown on the 1099) on you mom's final 1040 and subtract the amount that belongs to the trust/estate as "nominee" see https://ttlc.intuit.com/community/taxes/discussion/1099-split-for-deceased-recipient/00/2047870

>if it's like last year (me filing for a deceased taxpayer), that TurboTax will make me print that one and mail it as well.

could be. it's been a while since i did that. They keep changing things so that more returns can be efiled, so you never know.

If you aren't expected a refund then it really doesn't matter how long it takes the IRS to process. If you are expecting refunds, then it does matter. I just saw notice of a computation correction for an 10/2021 paper 1040 and that the refund would be coming soon.

[ira_query]

Wow, thanks indeed for the advice about trust charitable donations from principal not being deductible. That's the key piece of advice that'll save me much time. I'll be glad to pay taxes on the income without any deductions, and if I go that route, I'll feel better about doing the taxes myself. 

We deliberately separated the tax reporting ID's at the date of death, all income reported through that day on mom's SSN and everything after that on the Trust EIN. So I thought that makes things very clean and simple. Two tax returns, one individual and one trust (1041), all based on when the income happened.

[jtax]

Separating the income as of the DOD is the correct way to do it. I have had estate attorneys tell me no on bothers. Especially if it is just a couple of weeks or months. But you have done it correctly.

You won't have anything to worry about if the 1099s have the correct SSN or EIN and that income is reported on the appropriate 1040 or 1041. The IRS is very good at catching missing income from 1099s but not so good at catching many other things. (Of course you still must do it right, but my point is not to worry if you do it right and the 1099s match).

Good look and sorry for your loss.

[jtax]

Perhaps not relevant in your case, but often there is tangible personal property that that has little (but some) value that the beneficiaries don't want. If the estate/trust donates that there is no income tax deduction. (There is estate tax deduction, which usually doesn't matter these days). One way around that is that often the bene's are given the tangible property that they want. So if they take it and donate it they can personally take a deduction on their 1040s. That also may not matter these days with the high standard deduction, but it should work.

[jtax]

Also, if this is the trust's final year, the trust most likely won't have any tax liability. It will pass all of its income and expenses to the benes on k-1s and it will flow to their returns. Sometimes that might not be the case, but it usually is.