Do returns need to be filed for all trusts?

Do returns need to be filed for all trusts?

You must file Form IL-1041, Illinois Fiduciary Income and Replacement Tax Return, if you are a fiduciary of a trust or an estate and the trust or estate

• has net income or loss as defined under the Illinois Income Tax Act (IITA), regardless of any deduction for distributions to beneficiaries; or
• is a resident of Illinois, is required to file, or files a federal income tax return regardless of net income or loss.

Grantor Trusts do not file Form IL-1041.  Instead, the income earned from the trust is shown on the grantor's Form IL-1040, Individual Income Tax Return.

If the trust is a charitable organization exempt from federal income tax by reason of the Internal Revenue Code (IRC), Section 501(a), it is not required to file Form IL-1041.  However, unrelated business taxable income, as determined under IRC, Section 512 is subject to tax, without any deduction for the Illinois income tax, and must be reported on Form IL-990-T, Illinois Exempt Organization Income and Replacement Tax Return, instead of Form IL-1041.  For more information, see Form IL-990-T Instructions.

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