When does an estate have to file Form 1041?

When the estate has $600 or more of gross income for its tax year, or any beneficiary who is a nonresident alien. The executor files under the estate's own EIN. The return is due on the 15th day of the 4th month after the estate's tax year ends.

What are the 2026 tax brackets for estates and trusts?

Under Rev. Proc. 2025-32: 10% up to $3,300, 24% from $3,300 to $11,700, 35% from $11,700 to $16,000, and 37% above $16,000. Income distributed to beneficiaries is generally taxed to them instead, at their individual rates.

Can an estate use a fiscal year?

Yes. An estate's first tax year starts at death and can be any period of 12 months or less ending on the last day of a month. Trusts generally must use a calendar year, but a qualified revocable trust can elect under §645 (Form 8855) to be treated as part of the estate.

My parents lived in China and owned a U.S. house. What has to be filed when they die?

For a decedent who was neither a U.S. citizen nor a U.S. resident, Form 706-NA is required when U.S.-situated assets plus certain gifts exceed $60,000, due 9 months after death. If the estate earns income while it is being settled, Form 1041 may also be required.

Form 1041 for Estates and Trusts: 2026 Guide

Q: What's the difference between the final Form 1040 and Form 1041?

The final Form 1040 covers the decedent's income from January 1 through the date of death and is due on the normal date; a surviving spouse can file jointly. Income received after death, such as later rent or dividends, belongs to the estate and goes on Form 1041.

The short answer

After a family member dies, the income the estate earns while it is being settled, such as interest, dividends, rent and gains on sales, is reported by the executor on Form 1041 under the estate's own EIN. An estate must file if it has $600 or more of gross income for the year or any nonresident alien beneficiary. The return is due on the 15th day of the 4th month after the tax year ends (April 15 for calendar-year estates), and an estate may choose a fiscal year. For 2026, estate and trust tax brackets are so compressed that taxable income above $16,000 is taxed at 37%, which makes distributions to beneficiaries on Schedule K-1 a key planning step.

Who this applies to

Families where a parent or spouse just died and someone is serving as executor, especially if the estate holds a rental property, a brokerage account or a house that will take months to sell.

Children of parents who had a revocable living trust: after the grantor's death the trust becomes irrevocable and needs its own EIN and Form 1041.

Families with beneficiaries living in China: an estate with a nonresident alien beneficiary must file Form 1041 regardless of income, and distributions to that beneficiary may involve withholding.

Families whose parents lived in China but owned U.S. property or stocks: in addition to income tax, Form 706-NA may apply.

Beneficiaries receiving K-1s: heirs report K-1 amounts on their own Form 1040. Because the estate's 1041 is often finished late, a late K-1 is a common reason a beneficiary's personal return goes on extension.

Who files Form 1041, and when

The executor or trustee files. An estate files with $600 of gross income or any nonresident alien beneficiary; a trust files with any taxable income or $600 of gross income.

Get an EIN first: every estate or trust that must file Form 1041 needs an EIN, available online from the IRS and issued immediately once validated. Then file Form 56 to notify the IRS of the fiduciary relationship.

Tax year: an estate's tax year begins at the moment of death. Its first year can be any period of 12 months or less ending on the last day of a month; choosing a month other than December adopts a fiscal year. Trusts generally must use a calendar year, but a qualified revocable trust can elect under §645 (Form 8855) to be treated as part of the estate and use the estate's year.

Due date: the 15th day of the 4th month after the tax year ends; April 15 for calendar-year filers. Form 7004 gives a 5½-month extension to file, not to pay.

Estimated tax: an estate is not required to pay estimated tax for tax years ending within 2 years after death. Trusts generally pay estimates using Form 1041-ES.

North Carolina: if a federal 1041 is required and the estate or trust has North Carolina-source income or income for the benefit of a North Carolina resident, file Form D-407 by the same due date. North Carolina has had no estate tax since 2013.

2026 rates and Schedule K-1 distributions

Income kept in the estate or trust is taxed on very compressed brackets; income distributed is generally taxed to the beneficiaries at their own rates.

2026 estate and trust brackets (Rev. Proc. 2025-32): 10% up to $3,300; 24% from $3,300 to $11,700; 35% from $11,700 to $16,000; 37% above $16,000. By comparison, a single individual does not reach 37% until taxable income exceeds $640,600.

Long-term capital gains: for estates and trusts in 2026, the 0% rate applies up to $3,300 and the 15% rate up to $16,250, with 20% above that.

Exemption: $600 for an estate; $300 for a trust required to distribute all income currently.

Distribution deduction and K-1s: income distributed to beneficiaries is deductible on Form 1041 (limited to distributable net income), and each beneficiary receives a Schedule K-1 to report on their own Form 1040. K-1s are due with the 1041.

Final year: in the year the estate or trust terminates, excess deductions can pass through to beneficiaries on the K-1.

Net investment income tax: for estates and trusts, the 3.8% NIIT starts at the beginning of the top bracket, $16,000 for 2026, far below the individual thresholds. Retained interest, dividends, rent and capital gains can face both 37% and 3.8%.

How it fits with the final 1040, Form 706 and Form 706-NA

One death can involve three filings: the decedent's final Form 1040, the estate's Form 1041, and, depending on asset size and status, Form 706 or 706-NA.

Final Form 1040: reports income from January 1 to the date of death, due on the normal date. A surviving spouse can file jointly. If a refund is due, someone other than a surviving spouse filing jointly may need to attach Form 1310. Income received after death, such as rent or dividends paid later, belongs on the 1041.

Form 706 (U.S. citizens and residents): required for 2026 deaths only if the gross estate plus adjusted taxable gifts exceeds $15,000,000. It is due 9 months after death, with a 6-month extension available on Form 4768. To pass the unused exclusion to a surviving spouse (portability), a timely 706 must be filed even for a smaller estate.

Form 706-NA (nonresidents who are not U.S. citizens): required when U.S.-situated assets, such as U.S. real estate and U.S. stocks, plus certain gifts exceed $60,000. It is also due 9 months after death, and the threshold is not indexed for inflation. A U.S. house or brokerage account owned by parents living in China often falls here.

Basis of inherited property: generally the fair market value at the date of death, which is what the estate uses when it later sells.

A simple example

Simplified; state tax, the 3.8% net investment income tax and other details are ignored.

Mr. Chen died in North Carolina in March 2026, leaving a rental house and a brokerage account. His son, the executor, obtained an EIN for the estate and chose a fiscal year ending February 28, 2027, so the first Form 1041 is due June 15, 2027.

For that year the estate's net income from rent and dividends is $30,000. If the estate keeps it all, taxable income after the $600 exemption is $29,400, and tax under the 2026 brackets is about $3,851 + ($29,400 − $16,000) × 37% ≈ $8,809.

If the estate instead distributes $10,000 to each of two children, its taxable income falls to $9,400 and its tax to $330 + ($9,400 − $3,300) × 24% = $1,794. Each child receives a $10,000 K-1 and pays tax at their own rate. Mr. Chen's income from January 1, 2026 to his date of death goes on his final Form 1040, due April 15, 2027.

Common mistakes

"No one has to file after death." The final 1040 is still required, and the estate or trust files Form 1041 if it has income.

"Keep collecting rent under Dad's Social Security number." Income after death belongs to the estate and its EIN.

"Leave the money in the estate and distribute later." Retained income above $16,000 is taxed at 37%; timely distributions can shift it to beneficiaries' lower brackets.

"The estate is under $15 million, so Form 706 doesn't matter." Portability for a surviving spouse requires a timely 706.

"My parents were Chinese citizens, so U.S. estate tax doesn't apply." U.S.-situated assets above $60,000 trigger Form 706-NA.

What to do and when

Right away: get the estate's EIN, file Form 56, open an estate bank account, and obtain date-of-death values for each asset.

Before the first 1041: choose the estate's tax year; if there is a revocable trust, decide whether to make the §645 election on Form 8855.

April 15 of the year after death: the decedent's final Form 1040 is due.

9 months after death: Form 706 or 706-NA is due (Form 4768 extends by 6 months).

15th day of the 4th month after each tax year: Form 1041, K-1s and North Carolina D-407 are due, until the estate or trust closes.

How YCL can help

We help executors and trustees obtain the EIN, choose the tax year, and prepare Form 1041 with beneficiary K-1s, along with North Carolina Form D-407 and the decedent's final Form 1040.

For families with beneficiaries in China, or parents in China who left U.S. assets, we also handle nonresident beneficiary reporting and Form 706-NA. See Estate and trust tax returns.

For the full process, see our guide: Trust tax returns. For estate tax planning, see the estate tax guide.

YCL Accounting & Consulting is a multi-state CPA firm serving clients across the U.S. in English and Chinese, led by co-founder Gloria (Chenchen) Liu, CPA. You can start with a free 15-minute consultation.