Among all the challenging dynamics of inheriting a trust or estate or supervising the transfer of assets, it can be easy to forget about IRS requirements. Many nonprofits receive charitable contributions from donors in this fashion.
The upcoming April 15, 2021 income tax deadline doesn’t only apply to businesses. Many charitable trusts and recipients of trusts and estates are required to file Form 1041 by this due date.
If the Form 1041 deadline slipped your mind or you just realized you need to file, there is still time to request an extension. You can extend the Form 1041 deadline by filing Form 7004.
What is Form 1041?
IRS Form 1041 is an income tax return that estates file to report income, capital gains, deductions, and losses. Trusts and estates have to pay taxes after a transfer from a decedent to an heir. This is known as the estate tax. In some cases, charitable contributions can be deductible.
Beneficiaries of trusts and estates also owe income taxes on income generated by the decedent’s assets. There are many types of assets that can generate income, causing your trust or estate to owe income taxes, including savings accounts, stocks, bonds, mutual funds, and rental properties.
Trusts and estates operating on a calendar year are required to file Form 1041 by April 15, 2021. That being said, if you aren’t ready to meet the Form 1041 deadline, you can request an extension with Form 7004.
What is Form 7004?
Form 7004 is an IRS Extension Form that gives businesses, trusts, and estates more time on a variety of different income tax returns. Taxpayers do not have to indicate a specific reason for requesting an extension, they can simply file Form 7004 and get additional time.
Typically, the IRS grants taxpayers who file Form 7004 an extension of up to six months. Unfortunately, Form 7004 does not extend the deadlines for tax payments, so you will still need to pay on time. This form simply gives you more time to navigate your filing process and file Form 1041 correctly.
Form 7004 also covers extensions for 36 business income tax returns. Some other common forms are Form 1120, 1120-S, and 1065. For a complete list of the deadlines you can extend, click here.
When is Form 7004 Due?
As long as you file Form 7004 on or before your deadline, the IRS should automatically grant your trust or estate additional time to file. For the upcoming April 15, 2021 income tax deadlines, beneficiaries should file Form 7004 by April 15, 2021.
E-filing For 7004 is the fastest and easiest way to extend your 1041 deadline and it’s also the IRS recommendation. Filing Form 7004 online means your return is transmitted to the IRS immediately, cutting out delays and making it easy to meet your deadline.
At ExpressTaxExempt, we are proud to support the nonprofit sector and we want to ensure you have everything you need to meet all your IRS requirements. If your nonprofit or charitable trust needs to extend your Form 1041 deadline, we recommend our sister product, ExpressExtension.
ExpressExtension supports Form 7004 and makes filing IRS extension forms safe and easy. You will get form validation and great support.
E-file For 7004 in 3 Simple Steps
With our sister product, ExpressExtension, all you’ll need to do is complete these three steps to extend your Form 1041 deadline.