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Do returns need to be filed for all trusts?

Answer #529 -- ( Published 03/20/2006 04:25 PM | Updated 07/12/2017 10:38 AM )

Do returns need to be filed for all trusts?

You must file Form IL-1041, 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) allocable to Illinois, regardless of any deduction for distributions to beneficiaries;
  • is a resident of Illinois and files, or is required to file, a federal income tax return regardless of net income or loss; or
  • is a nonresident of Illinois but received income from Illinois sources which was not reported as pass-through withholding on Form IL-1120-ST, Form IL-1065, or Form IL-1041.

Note: "Grantor" trusts are not required to file Form IL-1041.

If the trust or estate 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, Exempt Organization Income and Replacement Tax Return, instead of Form IL-1041. For more information, see Form IL-990-T Instructions.

You are required to report and pay pass-through withholding on behalf of your nonresident beneficiaries if they have not provided Form IL-1000-E, Certificate of Exemption for Pass-through Withholding Payments, to you. For tax years ending:

  • On or after December 31, 2014, you must include these amounts on your Form IL-1041 and Schedule D, Beneficiary Information. You must also complete and retain a copy of Schedule K-1-T(3), Pass-through Withholding Calculation for Nonresident Members, for each of your nonresident beneficiaries.
    Note: If you are a fiscal-year filer and file during a year with a tax rate change, you will be required to complete Schedule K-1-T(3)-FY, Pass-through Withholding Calculation for Nonresident Members (for Fiscal Filers), instead. See the Schedule K-1-T(1) Instructions for more information.
  • Before December 31, 2014, you must file Form IL-1000, Pass-through Entity Payment Income Tax Return.
    Note: Prior year forms and instructions can be found by clicking the "Prior Years" link on our Business Tax Forms page and selecting the corresponding year.

See the instructions for the applicable form for due dates and filing requirements.

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