This article in the AIM Financial IRS tax-form series is IRS Form 8855: Election to Treat a Qualified Revocable Trust as Part of an Estate. This topic is useful for estate administrators, trustees, and families managing tax filings after a loved one’s death.

The IRS explains that Form 8855 allows an eligible revocable trust to be treated as part of the related estate for federal income tax purposes during a defined election period. The election is generally irrevocable, so understanding the requirements and deadline is important.

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When a loved one passes away, family members may need to manage several financial responsibilities, including estate administration, trust accounting, and federal income tax filings. One important tax document that trustees and estate representatives may encounter is IRS Form 8855, Election to Treat a Qualified Revocable Trust as Part of an Estate.

Understanding Form 8855 can help trustees and executors make informed decisions, coordinate tax reporting, and avoid missing important deadlines. AIM Financial provides tax preparation guidance for individuals, families, and businesses in Grand Rapids, Kentwood, Wyoming, and throughout West Michigan.

What Is IRS Form 8855?

IRS Form 8855 allows the trustee of an eligible revocable trust and the executor of the related estate, if one has been appointed, to make an election under Internal Revenue Code Section 645.

This election allows a qualifying trust to be treated as part of the deceased person’s related estate for federal income tax purposes during a specified period. Instead of treating the trust as a separate taxpayer for those purposes, the election permits combined income tax reporting under the applicable rules.

According to the IRS, the election is generally irrevocable once made. This means it cannot simply be canceled later because the family changes its mind. Trustees and estate representatives should understand the consequences before filing.

Official IRS resource: About Form 8855.

What Is a Qualified Revocable Trust?

A qualified revocable trust, often shortened to QRT, is generally a trust that was treated as owned by the deceased person immediately before death because that person held the relevant power to revoke it.

A common example is a revocable living trust established during someone’s lifetime. The person creating the trust may have retained the ability to change or cancel it while alive.

However, not every trust qualifies for the Section 645 election. The trust’s terms, ownership, and circumstances at the time of death must be reviewed under the applicable tax rules.

The election may be relevant when a deceased person leaves assets in a qualifying trust and an estate must also be administered. Whether making the election is appropriate depends on the specific facts and should be evaluated before the deadline.

Why Would an Estate or Trust Make the Election?

The election can simplify certain federal income tax reporting responsibilities during the period in which it is effective.

Potential considerations include:

• Coordinating tax reporting: Eligible trust and estate income can be reported together under the Section 645 rules.
• Managing administration: The election may help coordinate tax filings while the estate and trust assets are being managed.
• Organizing fiduciary responsibilities: The trustee and executor can establish a coordinated approach to reporting income, deductions, and credits.
• Planning the transition: The election has a defined duration, so representatives can plan for the trust’s tax reporting after the election period ends.

The election does not automatically eliminate taxes, make all trust income tax-free, or replace every required estate or trust filing. Its benefits and administrative effects depend on the circumstances.

Who Is Responsible for Form 8855?

Form 8855 is generally completed by the executor of the related estate and the trustee or trustees of the qualifying revocable trust or trusts, as required by the instructions.

If no executor has been appointed, a qualifying trust may still be able to make the election. In that situation, the applicable rules determine which trustee serves as the filing trustee and handles the related tax return responsibilities.

The people involved should confirm that they have the proper authority to make the election and agree on how the tax responsibilities will be handled. The form includes information about the estate or filing trust and certifications relating to the election.

When Is Form 8855 Due?

Timing is one of the most important parts of Form 8855.

Generally, Form 8855 must be filed by the due date, including any applicable extension, for Form 1041 for the first tax year of the related estate. The deadline can apply even when the combined estate and electing trust do not have enough income to require a Form 1041 income tax return.

If the estate receives an extension for its first Form 1041, the extended due date generally applies to Form 8855 as well.

Because the deadline depends on the estate’s tax year and filing circumstances, trustees and executors should not assume that they can wait until the estate administration is nearly finished.

The IRS provides further details in its Instructions for Form 1041.

How Long Does the Election Last?

The period during which the trust is treated as part of the estate is called the election period.

It generally begins on the date of the decedent’s death and ends when the applicable termination rules are met. These rules consider factors such as whether the estate’s assets have been distributed and whether a federal estate tax return, Form 706, is required.

When Form 706 is not required, the applicable date is generally two years after the date of death. When an estate tax return is required, different timing rules may apply.

The end of the election period matters because the trust and estate may need to change how they report income after the election terminates. The exact date should be determined using the current IRS instructions and the facts of the estate.

Common Form 8855 Mistakes to Avoid

Estate and trust tax filings can become complicated, especially when several people and financial accounts are involved. Common issues include:

• Assuming every revocable living trust automatically qualifies.
• Missing the Form 8855 filing deadline.
• Making the election without understanding that it is generally irrevocable.
• Failing to coordinate responsibilities between the executor and trustee.
• Overlooking income earned by estate or trust assets after the date of death.
• Assuming Form 8855 eliminates the need to file Form 1041 or other required tax documents.
• Failing to track when the election period ends.

Keeping organized records of the trust agreement, date of death, estate appointment documents, income statements, investment accounts, and distributions can help the responsible parties prepare accurate filings.

How AIM Financial Can Help With Estate and Trust Tax Preparation

Handling tax matters after a death can be difficult while a family is also managing legal, financial, and personal responsibilities. Estate and trust tax filings may involve special rules that differ from an individual’s regular Form 1040 income tax return.

AIM Financial helps taxpayers understand tax reporting requirements and prepare for tax filing obligations. If you are an executor, trustee, or family member managing estate-related financial matters in Grand Rapids, Kentwood, Wyoming, or elsewhere in West Michigan, professional tax preparation assistance can help you identify the forms and records that may be needed.

Contact AIM Financial to discuss your estate or trust tax preparation needs. If Form 8855 may apply to your situation, seek guidance early so the eligibility requirements, election deadline, and related Form 1041 responsibilities can be reviewed before a filing decision is made.

Visit the official IRS Form 8855 information page for the current form and guidance. Tax requirements depend on the specific estate and trust circumstances, and complex matters may also require advice from an estate attorney or other qualified professional.

This article is for general educational purposes and is not a substitute for individualized tax or legal advice.