What IRS Form 1041-QFT (2025) Is For
IRS Form 1041-QFT (2025) is the U.S. income tax return for Qualified Funeral Trusts (QFTs) used by trustees to report income, deductions, gains, losses, and tax owed for pre-need funeral trusts under Internal Revenue Code Section 685. A QFT is a domestic trust created through a contract with a funeral service provider to hold funds exclusively for the funeral or burial services of named beneficiaries.
The election to be treated as a Qualified Funeral Trust is irrevocable and changes its taxation from grantor rules to an independent federal income tax return. The Internal Revenue Service requires accurate filing to prevent IRS penalties, interest charges, a late-filing penalty, or other penalties for failing to pay or file taxes on time.
When You'd Use Form 1041-QFT for 2025 (Late or Amended Filing)
You would file IRS Form 1041-QFT (2025) late if you missed the April 15, 2026, tax deadline or received an Internal Revenue Service notice for unpaid tax, tax owed, or other penalties. Filing taxes late may result in a failure-to-file penalty, a late-filing penalty, or a failure-to-pay penalty, which adds interest charges until the total tax is paid.
Trustees must also file amended returns when correcting income, deductions, or allocations of income. If the balance remains unpaid, IRS penalties continue to accrue. Filing late does not disqualify refund claims if submitted within the allowed period under tax law.
Before completing the return, trustees should review an IRS account transcript to verify prior payments, outstanding balances, and any penalties that may already be assessed.
Key Rules Specific to 2025
- Tax Brackets: The tax brackets for the 2025 tax year are as follows: 10 percent on income up to $3,100, 24 percent on income from $3,100 to $11,150, 35 percent on income from $11,150 to $15,200, and 37 percent on income exceeding $15,200.
- Capital Gains: The capital gains rate remains at 20 percent for taxable income above $15,450.
- Calendar Year Filing: All Qualified Funeral Trusts must use the calendar year, with a due date of April 15, 2026. Trustees should always enter “2025” in the calendar year box at the top of the form.
- Net Investment Income Tax (NIIT): The 3.8 percent NIIT applies to undistributed net investment income above threshold levels.
- Composite Returns: Trustees may file composite returns for multiple QFTs, but tax must still be calculated separately for each trust.
If unpaid tax remains after filing, the IRS collection process may begin, including notices, interest charges, and potential enforcement action.
Step-by-Step (High Level)
- Gather Records: Collect income statements, investment documents, and IRS account transcripts. Request transcripts on IRS.gov or with Form 4506-T. Include all estimated tax payments to avoid IRS penalties or interest charges.
- Complete the 2025 Form: Use the December 2025 IRS Form 1041-QFT and enter “2025” in the calendar year field. File accurately to prevent a failure to file penalty, late payment penalty, or other penalties.
- Attach Required Schedules: Add Schedule D, Form 8960, and any beneficiary statements. Submit all forms together to ensure correct IRS processing.
- Calculate Penalties: Failure to file incurs a penalty of 5 percent per month, and failure to pay incurs a penalty of 0.5 percent. Interest charges continue until the tax remains unpaid.
- File the Return: Mail to IRS, Kansas City, MO 64999, or e-file if available. Late filers should confirm the date to avoid file penalties.
- Maintain Records: Keep copies of returns, payments, and installment agreement or payment plan confirmations for a minimum of three years.
Trustees who cannot pay the full amount owed may request an IRS payment plan to reduce additional penalties and manage the balance over time.
Common Mistakes and How to Avoid Them
- Wrong Tax Year Designation: Always write “2025” at the top of the form. Missing this detail can cause processing delays by the Internal Revenue Service.
- Incorrect EIN: Use the QFT’s unique Employer Identification Number. Composite returns require a separate EIN for each trust.
- Missing Documentation: Composite filings must include detailed income and tax breakdowns for each beneficiary.
- Omitting Estimated Tax Payments: Qualified Funeral Trusts with more than $1,000 in tax owed must make quarterly estimated tax payments using Form 1041-ES.
- Improper NIIT Reporting: The 3.8 percent Net Investment Income Tax must be applied separately to each trust’s undistributed income.
- Inadequate Recordkeeping: Maintain per-beneficiary allocation schedules, payment receipts, and e-file confirmations for IRS verification purposes.
In certain cases, trustees may request penalty abatement relief if late filing or late payment resulted from reasonable cause.
What Happens After You File
After you file IRS Form 1041-QFT (2025), the Internal Revenue Service processes paper returns in about eight to twelve weeks and e-filed returns in three to four weeks. If the total tax remains unpaid, the IRS will assess penalties, interest charges, and other penalties, such as the failure-to-pay or late-payment penalty, until the balance is paid in full. Trustees who owe tax may request penalty relief or set up an installment agreement or payment plan to manage their tax bill and avoid additional IRS penalties.
For clarity on which schedules or supporting forms to include, trustees can refer to the IRS Form Help Center to ensure accurate and complete filing.
FAQs
Can I still get a refund if I’m filing my 2025 IRS Form 1041-QFT late?
Yes, filing taxes late does not stop you from receiving a tax refund if you file within three years of the April 15, 2026, due date or two years of the tax payment. The Internal Revenue Service may still apply IRS penalties or other penalties, and interest charges on refunds are usually not paid for late filings.
How are IRS penalties calculated for failing to pay tax?
The failure-to-pay penalty is 0.5 percent per partial month of unpaid tax, and the late-filing penalty is 5 percent per month, both capped at 25 percent. When both apply in the same month, the filing penalty drops to 4.5 percent. Interest charges and other penalties accrue until paid.
What transcripts do I need to file a late return and avoid additional penalties?
Trustees should request IRS account transcripts to confirm income, payments, and penalty assessments. These records help prevent duplicate IRS penalties or failure-to-file penalties. Transcripts can be obtained online at IRS.gov or by submitting Form 4506-T by mail.
Should I also file amended state returns when I file taxes late or face a filing penalty?
Yes, states that follow federal income tax rules typically require amended filings when federal returns are changed. Failure to file or late filing may cause additional interest charges, filing penalties, or other penalties. Check your state tax agency for penalty relief and deadlines.
Can I e-file amended returns or late filings of IRS Form 1041-QFT (2025)?
Some 2025 returns can be e-filed, but most amended returns must be mailed. E-filing may reduce interest charges, late payment penalties, and other penalties. Verify e-file eligibility on the Internal Revenue Service website before submitting your income tax return.
What if I am unable to pay the full amount of tax owed or other penalties immediately?
File taxes promptly to avoid the failure-to-file penalty. Trustees can request a payment plan or installment agreement to manage late payment or unpaid taxes. These options reduce late payment penalties, IRS penalties, and interest charges.
How long does the Internal Revenue Service have to audit a late-filed return or assess penalties?
The IRS generally has three years from the date of filing to assess penalties and interest charges. If income omissions exceed 25 percent, the limit extends to six years. There is no limit to fraud or failure to file, and late filing may result in ongoing IRS penalties.
