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Ohio Free Printable  for 2022 Ohio Fiduciary Income Tax Return Instructions

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Fiduciary Income Tax Return Instructions
Form IT 1041 Instructions

For taxable year beginning in 2021 Ohio IT 1041 Fiduciary Income Tax Return Instructions Rev. 11/21 hio tax. Department of Taxation hio.gov IT 1041 Rev. 11/21 Table of Contents A Adjustments to Federal Income ��������������������������������������������� 9-12 Allocating Income...................................................................... 13 Amended Returns.................................................................... 7-8 Apportionment Factor........................................................... 14-15 B Beneficiary Schedule................................................................. 16 H Highlights for 2021...................................................................... 2 I Interest & Penalties..................................................................... 9 IT NRCE............................................................................... 17-20 M D Matching Allocation Based on Distributions .............................. 22 Matching Expenses & Loss Amounts ��������������������������������������� 21 E Payment Options...................................................................... 4-5 F Refundable Business Credits ���������������������������������������������� 15-16 Refunds....................................................................................... 9 Resident Credit Calculation (IT RCTE) ������������������������������������� 16 Due Dates................................................................................... 7 Entity Designation....................................................................... 8 Estate Credits....................................................................... 11-12 Filing Tips.................................................................................... 3 G General Information..................................................................... 6 P R T Tax Brackets................................................................................ 9 Taxable Income........................................................................... 9 Taxpayer Assistance ������������������������������������������������������������������� 1 Online Resources The Department of Taxation's website at tax.ohio.gov has many resources available to assist when filing the Ohio Pass-Through Entity & Fiduciary income tax returns: FAQs – Review answers to common questions on topics. Forms – Find all pass-through entity & fiduciary income tax forms (including related schedules and worksheets). Many forms have fill-in versions that can be completed online, print, and then submit to the Department. Information Releases – Research detailed explanations and legal analyses of certain tax topics. Ohio Virtual Tax Academy – View webinars designed and presented by Department staff on Ohio's state taxes. Tax Alerts – Sign up to receive tax updates and reminders from the Department via email. Federal Privacy Act Notice Because we require you to provide us with a Social Security number, the Federal Privacy Act of 1974 requires us to inform you that providing us your Social Security number is mandatory. Ohio Revised Code 5703.05, 5703.057 and 5747.08 authorize us to request this information. We need your Social Security number in order to administer this tax. IT 1041 Rev. 11/21 Taxpayer Assistance Need Help? – To help answer questions and ensure that the tax returns are filed accurately, the Department of Taxation provides the following resources at tax.ohio.gov: Additionally, the website has all Pass-Through Entity & Fiduciary income tax forms to download or print. If the answer is unavailable on the website, contact the Department using any of the following methods: Email – Click 'Contact Us' at the top right on tax.ohio.gov and select 'Email Us' to access a secure email form, or email directly to [email protected] Call – To speak with an examiner at 1-888-405-4039 during the Department's normal business hours. Normal business hours are from 8 a.m. to 5 p.m. Monday through Friday excluding holidays. For persons who use text telephones (TTYs) or adaptive telephone equipment only: Contact the Ohio Relay Service at 7-1-1 or 1-800-750-0750 and give the communication assistant the Ohio Department of Taxation phone number that you wish to contact. Write – Contact the Department by mail at: Ohio Department of Taxation Pass-Through Entity & Trust P.O. Box 2619 Columbus, OH 43216-2619 Note: Please use the street address listed below to overnight documents to the Department. 4485 Northland Ridge Blvd. Columbus, OH 43229-6596 Visit – The Department’s visitor center is open, by appointment only, during normal business hours (8:00 a.m. to 5:00 p.m., Monday through Friday). To make an appointment, please call 855-567-8292 during normal business hours or use the applicable email. Form Requests: Visit tax.ohio.gov to easily download our forms. Request tax forms anytime by calling 1-800-282-1782. These instructions contain law references for specific line items and requirements. To review Ohio Pass-Through Entity & Fiduciary income tax law, see R.C. 5747 and R.C. 5733, respectively. Go Paperless and File Electronically! The IT 1041 can be filed electronically through the federal e-file program overseen by the IRS (irs.gov/filing), or through a participating third-party tax preparation product. PTEs can verify their software is compatible with the MeF program by reviewing the list of approved software vendors at PTE and Fiduciary Income Tax - Software Developers. - 1- IT 1041 Rev. 11/21 Highlights for 2021 New Tax Bracket Update Beginning with tax year 2021, the tax brackets for fiduciary income tax have been indexed for inflation The updated tax brackets can be found on page 9. New Scholarship Donation Credit A nonrefundable credit is available beginning in tax year 2020 to trusts/estates who donate to a scholarship granting organization. See the instructionson page 12. Credit Changes Due to law changes, the campaign contribution tax credit has been reinstated for tax year 2021. However, the financial institution tax (FIT) credit is no longer available beginning in tax year 2021. Lead Abatement Credit A nonrefundable credit is available beginning in tax year 2020 for certain PTEs who pay to have lead removed from residential properties. See R.C. 5747.26. Motion Picture Credit Expanded Beginning with tax year starting on or after January 1, 2019, the Motion Picture Credit was expanded to include Broadway theatrical productions. See the line item instructions on page 16. See R.C. 5747.66. IT K-1 Each entity with Ohio income should prepare a separate IT K-1 for each investor or qualifying beneficiary to enclose with the investor’s or beneficiary’s return. For more information, see the IT K-1 form and instructions on tax. ohio.gov in the searchable Tax Forms section. Credit Carryforward Beginning with tax year that start on or after January 1, 2021 the credit carryforward of overpayments has been reinstated, however for tax years 2017-2019 the Department did not permit credit carryforwards. A credit carryforward is only allowed on a timely filed, original return; otherwise, any overpayment will be refunded. -2- Opportunity Zone Investment Credit Transfer Form An applicant is eligible to transfer an unused Ohio Opportunity Zone Investment Credit issued by the Development Services Agency (DSA). For more information about the credit, visit development. ohio.gov or call DSA at 1-800-848-1300. For more information, see the form and instructions on tax.ohio.gov in the searchable Tax Forms section. See R.C. 122.84. Schedule E Update (Nonrefundable Business Credits) Schedule E has been updated to include the new Scholarship Donation Credit. Note: Ohio Development Services Agency is now known as Ohio Department of Development. IT RCTE (Trust/Estate Resident Credit) A new form to calculate the trust’s/estate’s resident credit. IT NRCE: Ohio Nonresident Credit for Estates Estates must use the IT NRCE to calculate the nonresident portion of their federal taxable income. The nonresident portion is used to calculate the Ohio nonresident credit. Include the IT NRCE form with the completed IT 1041 and retain a copy for the estate’s records. If the tax preparation software allows for PDF attachments, include a copy of the form. The IT NRCE form may be obtained in the searchable Tax Forms section at tax.ohio.gov. Electronic Filing The IT 1041 can be filed electronically through the federal efile program overseen by the IRS (irs.gov/filing), or through a participating third-party tax preparation product. For a current list of approved software programs, please see the Software Developers page on the Ohio Department of,Taxation website, and search for the most recent MeF Approval Status link. A tax return preparer that prepares more than 11 original tax returns during any calendar year shall use electronic filing technology. This provision does not apply to a tax return preparer in any calendar year if, during the previous calendar year, the tax return preparer prepared not more than 10 original tax returns. See R.C. 5747.082 Filing Tips IT 1041 Rev. 11/21 Provide a Current Address The Department uses the most up-to-date address on file to send correspondence, billings, assessments and refunds. If the address is not correct, refunds and notices will be mailed to the incorrect address. To update an address, check the box above the address line on the return or visit the Business Address Update page at tax.ohio.gov to change the address. Verify the IT 1041 and UPCs are for the Correct Tax Year The Department releases new forms and UPCs each tax year. Do not cross out the year at the top of the IT 1041 or UPC and write in a new one, as doing so will delay the processing of the IT 1041 or UPC. Maintain a Bank Account The trust or estate must maintain its bank account to ensure it can receive refunds after its closing date. The Department cannot change the name on a refund check, nor issue the check directly to a trustee or beneficiary, due to the closing or termination of a trust or estate. Report FEIN or SSN in Correct Field Do not enter an SSN in the FEIN field nor enter a FEIN in the SSN field. Determine Residency of the Trust A trust’s residency is determined under Ohio law using a series of tests; it is not determined based on the location of either the trustee or the administration of the trust’s assets. Please note, it is possible that more than one residency test can apply to all or a portion of a trust. See R.C. 5747.01(I)(3) and Information Release IT 2003-02 - Trust Residency. Reprint Corrected Software-Generated Paper Returns If the printed software-generated return from a tax preparation program subsequently requires changes on the return, do not write in the changes. Use the software to make the necessary changes, save, and reprint the return. The Department’s system will not pick up handwritten changes on returns generated by tax preparation software. Complete All Applicable Schedules on the Return When filing via a software program, complete all relevant schedules and do not override any line items. Information from schedules on the return flows to other lines that are used to calculate the tax liability. If the schedules are not completed, a value of zero will flow to the corresponding lines, which will override any amounts that may have been entered. Report Trust income as Follows: ● Qualifying trust amounts on schedule VI (see page 13 for instructions); ● Apportioned modified business income and qualifying investment income on schedule VII (see page 13 for instructions); ● Allocated modified nonbusiness income on schedule VIII (see page 13 for instructions). Trust income categorized incorrectly may result in a potential billing notice or refund reduction. Report Apportionment Ratio and Ownership Percentage Enter percentages and ratios in decimal format (e.g., report 30.09% as .3009). Report 100% as 1.0000. Enter apportionment ratios in decimal format and carry to six decimal places. In addition, do not enter text (e.g., “null” or “zero”) in numeric fields. Report Estimated Payments, Withholding, and Credits on Correct Lines incorrect reporting of the payments, withholdings, and credits may result in a denied/reduced refund or bill. ● Report estimated payments and withholding/overpayments previously claimed on Schedule XI – Net Payment Worksheet as follows: ● Line 79a: Enter estimated payments made with an IT 1041 UPC or EFT payments made through the Ohio Treasurer of State for this tax year; ● Line 79b: Enter 1099 withholding; ● Line 79c: Enter W-2 withholding; ● Line 79e: [Amended Return ONLY] Enter the refund amount from line 17 from the original return filed for this tax year. ● Report refundable business credits on Line 15 of Schedule 1 and on Schedule XII – Refundable Business Credits as follows: ● Line 81: Enter the Motion Picture/Broadway credit; ● Line 82: Enter the refundable portion of the Job Retention credit and the Job Creation credit; ● Line 83: Enter the Pass-Through Entity credit; ● Line 84: Enter the Venture Capital credit; ● Line 85: Enter the refundable portion of the Ohio Historic Preservation credit. ● Report nonrefundable business credits on Line 10 of Schedule 1 and on Schedule E. Include a copy of Schedule E, Schedule of Nonrefundable Business Credits, and include copies of the required certificates and/or IT K-1s for verification. ● Do not use Schedule E to claim refundable credits. Instead, claim refundable credits on the appropriate “refundable credits” line. Calculate the Resident Tax Credit on the Trust’s Modified Nonbusiness income Include only the modified nonbusiness income in the calculation of the resident trust tax credit on Schedule IX. Failure to do so may result in a denied/reduced refund or bill. Report Proportionate Share of Credits A distribution made by a trust/estate may affect the amount of a credit it is allowed to claim on its IT 1041. Credits must be shared between the trust or estate and the beneficiaries in proportion to the income retained versus distributed. See R.C. 5747.02(C)(3). -3- Payment Options IT 1041 Rev. 11/21 First-Time Filers: Submit PTE Registration Form Before First Estimated Payment If the trust or estate is a first-time filer, submit the Pass-Through Entity and Fiduciary Income Tax Registration Form before submitting the first estimated payment. The form can be found on the tax.ohio.gov website in the Tax Forms search. Failure to submit the registration form may result in a delay in processing the estimated payment(s), resulting in a billing notice or refund delay. Submit a Separate Check for Each Balance A separate check is required for each tax return payment, estimated payment, billing/assessment payment, etc. The Department cannot apply a single check to multiple balances. The check or money order should be made payable to “Ohio Treasurer of State” with identifying information on the memo line, including: ● Federal employer identification number (FEIN), or SSN for decedent’s estate, only ● Tax form using the payment (IT 1041) ● Tax year end for the payment (mm-dd-yy) Using Payment Coupons Created by Third-Party Software Before submitting a payment coupon created by third party software, please verify the reporting period end date matches the softwaregenerated Key ID numbers and the number string at the bottom of the payment coupon, in the format MMYY. If mismatched, the payment will be misdirected, causing a delay in processing the estimated payment(s), resulting in a billing notice or refund delay. Please contact the third-party software company’s support line to resolve. Methods for Making PTE and Fiduciary Income Tax Payments 1. Electronic Funds Transfer (EFT): Estimated payments may be remitted by EFT via the Ohio Treasurer of State’s website eft.tos.ohio.gov. If no previous payments were made via EFT with the Ohio Treasurer of State, complete the EFT Agreement Form. The agreement form may be submitted by email to the TOS at [email protected], or faxed to (614)752-5377. Please allow 72 hours for an email response for authorization to register. Once authorized, register for EFT payments at EFT Registration and select the appropriate PTE form tax type (1140, 4708, 1041) from the drop down menu. After selecting a tax type, you will be prompted to enter the Ohio account number or Federal Employer Identification Number (FEIN). Please enter the FEIN in both boxes. Questions about the EFT payment process should be directed to the Ohio Treasurer of State by calling (877)338-6446. 2. Check or Money Order: Make check or money order payable to “Ohio Treasurer of State.” A payment made by a check or money order must be submitted with the appropriate Ohio Universal Payment Coupon (UPC) based on the form filed. All UPCs can be found on the tax.ohio.gov website in the searchable Tax Forms section by entering “UPC” in the Form Title or Number field. Please mail the payment and UPC to the address on the UPC or hand deliver to our self-service walk-in center. 3. Electronic Check: When filing electronically through an approved software program, the PTE or fiduciary has the option to make a payment by electronic check in the form of an Electronic Funds Withdrawal, or direct debit. The direct debit option is only available for e-filed returns. For mailed returns created from an approved software program, the options for payment are 1) Electronic Funds Transfer (EFT), or 2) check or money order, as listed above. For a current list of approved software programs, please see the Software Developers page on the Ohio Department of Taxation website, and search for the most recent MeF Approval Status link. Please contact the software companies directly for their electronic payments support. -4- Payment Options Continued IT 1041 Rev. 11/21 Completing the Universal Payment Coupon (UPC) Each payment made by check or money order must be submitted with the appropriate Ohio Universal Payment Coupon (UPC). Application of payments is driven by the UPC used and is based on which form is filed (i.e., IT 1041, IT 4708, or IT 1140). Each UPC allows the Taxpayer to make either an estimated payment (“ES” payment) or payment submitted with the tax return (“P” payment). Only one type of payment can be made on each UPC submitted. All UPCs can be found on the searchable Tax Forms page by entering “UPC” in the Form Title or Number field. The IT 1041 UPC is used by trusts and estates to make either an estimated payment (IT 1041ES Trust or Estate) or a payment submitted with the trust/estate return (IT 1041P Trust or Estate). When completing the UPC: ● Indicate the reporting period by providing the filing period start date and end date in the format mm-dd-yy; ● Specify the appropriate payment type (IT 1041ES Trust or Estate or IT 1041P Trust or Estate); ● Enter the entity type code in the box above the payment amount (*see codes on instructions page above UPC); ● Enter the amount of payment as a whole number without a decimal, as the UPC features a preprinted “.00”; ● A FEIN should be entered for a trust. The SSN field should only be used by the estate. Sample IT 1041 UPC: This form must be included with each check or money order. Include a Check or Money Order with each IT 1041 UPC Payable to “Ohio Treasurer of State” with identifying information on the memo line, including: ● Federal employer identification number (FEIN), or SSN for decedent’s estate only ● Tax form using the payment (IT 1041) ● Tax year end for the payment (mm-dd-yy) -5- 2021 Ohio Form IT 1041 General Instructions Who must file the IT 1041? All estates and trusts, including foreign estates and trusts, that are subject to the Ohio fiduciary income tax must file the IT 1041 and pay any tax due. All estates are subject to tax on their Ohio taxable income, while all trusts are subject to tax on their modified Ohio taxable income. Generally, estates that file the federal 1041 and reside in Ohio, or earn or receive income in Ohio, must file the IT 1041. Trusts that file the federal 1041 or the federal 1040NR and have retained earnings and earn or receive income that is allocable or apportionable to Ohio, must file the IT 1041. Foreign estates and trusts are not necessarily exempt from Ohio income tax. Instead, Ohio levies its fiduciary income tax on every estate or trust residing in or earning or receiving income in Ohio. “Trust” is specifically defined to include any trust described in IRC §641- §685 that is not one of the following trusts: ● Grantor trusts ● Charitable remainder trusts ● Retirement trusts ● Pre-need funeral trusts ● Qualified funeral trusts ● Endowment and perpetual care trusts ● Qualified settlement trust and funds ● Retirement trust funds See R.C. 5747.02(A)(1) and (2), 5747.02(D), 5747.01(S), and 5747.01(AA). How does the residency of the trust affect the taxation of the trust? A trust’s residency status only affects how its modified nonbusiness income is taxed. A trust’s modified nonbusiness income is the portion of the trust’s Ohio taxable income that is not included on schedules VI – Allocated Qualifying Trust Amounts and VII - Apportioned Income Amounts of the IT 1041. Some examples of modified nonbusiness income that are taxable to Ohio can be found under the section on this page labeled “What Trust Income is Subject to Tax?” Generally, most income reported by a trust is modified nonbusiness income. A resident trust is required to pay Ohio income tax on all modified nonbusiness income but may claim a resident credit on Schedule IX of the IT 1041. The resident credit equals the lesser of modified nonbusiness income subjected to tax in another state, or the amount of tax paid to another state on that income. Conversely, a nonresident trust is required to pay Ohio income tax on the items of modified nonbusiness income listed above only to the extent they are from property that is located in Ohio or intangible property used in Ohio. Additionally, lottery winnings are taxable as modified nonbusiness income. See R.C. 5747.01(AA)(3), (4)(c) and 5747.20(B). Is a trust that only has investment income required to file? A resident trust investing only in savings accounts, certificates of deposit, stocks, bonds, commercial paper and/or mutual funds will owe Ohio income tax if the trust had federal taxable income after distributions. The tax on each resident trust is based on the trust’s federal taxable income, plus or minus the adjustments set forth on the IT 1041. However, a nonresident trust investing only in savings accounts, certificates of deposit, publicly traded stocks, bonds, commercial paper and/ or mutual funds will not owe any Ohio income tax. See R.C.5747.01(I)(3), 5747.01(S), 5747.01(AA)(3) and (4)(c) and 5747.20(B). If the trust or estate has a loss is it still required to file an IT 1041? The trust or estate may still have an IT 1041 filing requirement, even if it reports a loss on the federal 1041 during the tax year, as IT 1041 Rev. 11/21 adjustments on Schedule II could result in Ohio taxable income. The trust or estate is not required to file the IT 1041 if the following three scenarios apply: ● The trust or estate’s federal 1041 or federal 1040NR shows no taxable income or has a negative taxable income (e.g., simple trusts and most estate tax returns); ● The trust or estate did not earn or receive any Ohio sourced income during the tax year; AND ● There are no Ohio adjustments that would result in Ohio taxable income. See R.C. 5747.02 and 5747.08. How does a federal §645 election impact the IT 1041? An election under IRC §645 allows the executor of an estate and the trustee of a revocable trust to elect to treat the trust as part of the estate for federal tax purposes. The beneficiaries of an estate that make a §645 election must use the federal taxable income as the starting point for completing the IT 1041. The estate must also designate the same estate type(s) selected on the federal 1041. The estate may only claim deductions and credits available to an estate on its IT 1041; it cannot claim any credits or deductions, and should not check any boxes, available only to trusts. However, the beneficiary can claim any credits and withholding amounts belonging to the trust identified in the §645 election. Note: The estate must include a copy of the federal return when filing the IT 1041 as evidence of its §645 election. What Trust Income is Subject to Tax? A trust is taxed on its “modified Ohio taxable income.” The modified Ohio taxable income is based on the trust’s federal taxable income, subject to the adjustments on Schedule II of the IT 1041. After determining its “modified Ohio taxable income” the trust must determine which of the following types of income it is required to report: ● Qualifying trust amount: Capital gains and losses from the sale, exchange, or other disposition of equity or ownership interests in, or debt obligations of, a qualifying investee to the extent included in the trust’s Ohio taxable income, but only if the following requirements are satisfied: ● The book value of the qualifying investee’s physical assets in this state and everywhere as of the last day of the qualifying investee’s fiscal or calendar year ending immediately prior to the date on which the trust recognizes the gain or loss available to the trust. ● The trust owns at least 5% of the qualifying investee during the previous 10 years. ● Modified Business Income: Business income included in a trust’s Ohio taxable income after such taxable income is first reduced by the qualifying trust amount, if any. ● Qualifying Investment Income: acquisition, ownership, or disposition of intangible property, loan fees, financing fees, consent fees, waiver fees, application fees, net management fees, dividend income, interest income, net capital gains from the sale or exchange of intangible property, or distributive shares of income. ● Modified nonbusiness income: Is a portion of the trust’s Ohio taxable income other than the qualifying trust amount, and other than the allocated qualifying trust amount, and apportioned income amounts; to the extent such qualifying investment income is not otherwise part of modified business income. Some examples of modified nonbusiness income that are taxable to Ohio include: ● Capital gains or losses from the sale, exchange or transfer of real or tangible personal property; ● Rents and royalties from real or tangible personal property; ● Royalties from patents or copyrights; ● Lottery winnings and gains and/or losses from the sale or transfer of such winnings. See R.C. 5747.01(AA) and 5747.02(A)(1). -6- How should a Qualified Pre-Income Tax Trust complete the IT 1041? A trust that made the election to be a qualified pre-income tax trust is not subject to Ohio income tax. However, such a trust must file the IT 1041, as follows, for informational purposes: ● Include only pages 1 and 2 of the IT 1041; ● Check the “qualified pre-income tax trust” box at the top of page 1; ● Enter the trust’s federal taxable income on line 1; ● Deduct the amount entered on line 1 on line 2; ● Enter zero on lines 3 and 13; AND ● Include a copy of the acknowledgment from the Department that the trust is exempt from Ohio income tax. See R.C. 5747.01(EE). IT 1041 Rev. 11/21 taxable year If the trust or estate’s estimated tax liability after credits is greater than $500. The interest penalty applies to estimated payments not timely made. For more information, see page 9. Due Dates for Estimated Tax Payments If any filing due date set forth below falls on a weekend or on a holiday, then the due date becomes the first business day thereafter. Due Date for Estimated Payments On or before the 15th day of the 4th 22.5% of the current year tax liability month of the taxable year. On or before the 15th day of the 6th 45% of the current year tax liability month of the taxable year. When is the Return Due? For all trusts and estates, the IT 1041, along with all supporting documentation such as IT K-1(s), W2s, 1099s and federal 1041 or federal 1040NR, is due by the date listed in the table below. If any filing due date set forth falls on a weekend or on a holiday, then the due date becomes the first business day thereafter. Filing Extensions If the trust or estate has a 12/31/2021 calendar year end, the entity can extend the due date for filing the IT 1041 to September 30, 2022, provided it qualifies for an IRS extension of time to file. Ohio does not have an extension request form but honors the IRS extension. Include a copy of the IRS extension or IRS acknowledgement, and/ or the extension confirmation number, if electronically filed. If the trust or estate has a fiscal taxable year end, it will have a different extension due date. See the table below for extension due dates. An extension of time to file does not extend the time for payment of the tax due. The trust or estate must make extension payments with the required IT 1041 UPC available at the link Tax Forms, or by searching for “UPC” in the Form Title or Number field on the TAX FORMS page at tax.ohio.gov. Interest will accrue on any tax not paid by the due date, and penalties may also apply. If the trust or estate has a fiscal year end, please see the table below. Interest will accrue on any unpaid tax, and penalties may also apply. See table below. % Cumulative Estimated Payments Made On or before the 15th day of 9th 67.5% of the current year tax liability month of the taxable year. On or before the 15th day after the 90% of the current year tax liability close of the taxable year Does Ohio Follow the Alternative Preparer Signature Procedures? The Department follows the federal alternative preparer signature procedures found in federal Notice 2004-54; However, the paid preparer must print (not sign) his/her name if the taxpayer authorizes the preparer to discuss the return with the Department. Preparers with a Preparer Tax Identification Number (PTIN) must provide it on all returns. See R.C. 5703.262(B) and 5747.08(F). 9/30/22 Can the Trust or Estate’s Tax Preparer Contact the Department About the Tax Return? The fiduciary of the estate or trust can check the box above the tax preparer’s name on page 2 of the return to authorize the preparer to: ● Contact the Department about the status of the trust or estate’s return, payments, or refund; ● Provide the Department with information missing from the trust or estate’s return; AND ● Respond to inquiries or notices from the Department related to the return. 1/31/22 5/16/22 4/18/23 10/31/22 4/18/23 See R.C. 5747.08(J). 2/28/22 6/15/22 4/18/23 11/30/22 4/18/23 3/31/22 7/15/22 4/18/23 12/31/22 4/18/23 4/30/22 8/15/22 4/18/23 1/31/23 4/18/23 5/31/22 9/15/22 4/18/23 2/28/23 4/18/23 What is the IT K-1? The IT K-1 allows the trust or estate to report its income, adjustments, credits, and apportionment information to its beneficiaries. The information is used by the trust or estate’s beneficiaries when completing the IT 1040, IT 1041, or IT 4708. 6/30/22 10/17/22 4/18/23 3/31/23 4/18/23 7/31/22 11/15/22 4/18/23 4/30/23 4/30/23 8/31/22 12/15/22 4/18/23 5/31/23 5/31/23 9/30/22 1/17/23 4/18/23 6/30/23 6/30/23 10/31/22 2/15/23 4/18/23 7/31/23 7/31/23 11/30/22 3/15/23 4/18/23 8/31/23 8/31/23 Table 1: TY 2021 Due Dates and Extended Due Dates Fiscal Year Ends IRS Due Date Ohio Due Date 12/31/21 4/18/22 4/18/22 IRS Ext. Due Date 9/30/22 Ohio Ext. Due Date See R.C. 5747.08(G) and Ohio Admin Code 5703-07-05. Estimated Tax Payments The trust or estate must make estimated tax payments with the IT 1041ES Universal Payment Coupon (UPC) for the entity’s The trust or estate must complete two copies of the IT K-1 for each beneficiary whose income is included on the IT 1041. One copy of the IT K-1 must be included when filing the IT 1041. The other copy should be provided to the beneficiary. The IT K-1 is available in the searchable Tax Forms section at tax.ohio.gov. For additional information, please see the IT K-1 category in the PTE FAQs at tax.ohio.gov. Amended Returns When to Amend The trust or estate can file an amended IT 1041 to report changes to the originally filed return. An amended return can result in either a tax due or a refund based on the changes. Under certain circumstances, an amended return may be required. To amend the IT 1041 the trust or estate should file a new return showing the -7- IT 1041 Rev. 11/21 original amounts for any item that remains unchanged and reflecting all proposed changes; indicate that it is amended by checking the box at the top of page 1. Please include a copy of the following with the amended return: ● Any canceled checks used as payment on the originally filed return; AND ● Supporting documentation that reflects the reason(s) for filing the amended return. Note: It may take at least 180 days from the date of receipt to process the amended return. For additional information, see tax.ohio.gov for FAQs. When not to amend the return Some common mistakes may not require an amended return. Some examples include: ● Math errors; ● Missing pages or schedules; ● Demographic errors; OR ● Missing income statements (W-2, 1099, K-1) or credit certificates. File Prior to Out of Statute Ohio’s fiduciary income taxes generally have a four-year statute of limitations. The Department has four years to issue an assessment from the later of when the return was due or filed. The PTE or fiduciary has four years from the date of the payment to request a refund. Please see the table below for details. Tax Year Due Date Timely Payment or Withholding Out-of-Statute Date 2017 4/18/18 4/18/22 2018 4/15/19 4/17/23 2019 7/15/20 7/15/24 2020 5/17/21 5/19/25 2021 4/18/22 4/20/26 Completing the Applicable Check Boxes on Page 1 of the Ohio IT 1041 On page 1 of the return, it must designate whether the entity is an estate or a trust. Trust and estate types (other than resident, nonresident, irrevocable or testamentary) are determined by the federal 1041 filing. In these situations, the department will either make the corrections to the return or contact the trust or estate to request the needed documentation. Estates must select one or both of the following: ● Decedent’s estate ● Bankruptcy estate Requesting a refund The trust or estate may want to amend the return to request an additional credit, deduction or payment. Such changes may result in a refund. The trust or estate has four years from the date of the payment to request a refund. The trust or estate must include supporting documentation to substantiate the changes reported on the amended return. Some common required documentation includes: ● The federal return, including applicable schedules and attachments; ● Copies of income statements (W-2, 1099, etc.); ● IT K-1, or credit certificates from DSA; ● Form IT NRCE. Trusts must select one or the other of each of the following: ● Simple or complex ● Resident or nonresident Note: If applicable, the trust should also select one or more of the following: ● Irrevocable ● Testamentary Trust Residency A “resident” trust is a trust that in whole or in part that resides in Ohio. If the resident trust resides in part, it is only a resident with respect to that part. See R.C. 5747.01(I)(3) and information release IT 2003-02. Reporting additional tax due The trust or estate should amend the return to report additional income or reduce a previously claimed credit or deduction. Such changes may result in additional tax due. Payment should be included with the amended return using an IT 1041 UPC payment coupon. A trust created at the time of an individuals death under a will (testamentary) is a testamentary trust. A testamentary trust resides in Ohio if the decedent at the time of death was domiciled in Ohio for Ohio estate tax purposes (R.C. 5731). Changes to the federal return If the IRS makes changes to the federal return, either based on an audit or an amended return, and those changes affect the Ohio return, the trust or estate is required to file an amended IT 1041. Do not file the amended Ohio return until the IRS has finalized the changes to the federal return. Once the changes are finalized, please include a copy of all of the following: ● The federal amended 1041; ● The IRS acceptance letter; OR ● The refund check issued to the trust or estate by the IRS, if applicable An irrevocable trust resides in Ohio if (i) at least one “qualifying beneficiary” (R.C. 5747.01(I)(3)(c)) is domiciled in Ohio for all or a portion of the trust’s taxable year and (ii) at any time the trust received assets from one or more of the following: ● An individual who was domiciled in Ohio for income tax purposes at the time he/she transferred assets to the trust; OR ● An individual who was domiciled in Ohio for income tax purposes at the time the trust document became irrevocable even if the individual was not domiciled in Ohio at the time he/ she transferred the assets to the trust; OR ● An estate of an individual who at the time of death was domiciled in Ohio for estate tax purposes; OR ● An insurance company, pension plan or court award on account of the death of an individual, and at the time of the individual’s death either (i) the individual was domiciled in Ohio for estate tax purposes or (ii) the owner of the insurance policy was domiciled in Ohio for income tax purposes. ● Note: The list above is not all-inclusive. For additional information, see R.C. 5747.01(I)(3)(a),(e) and (f). Note: Instead of including a copy of these documents, the trust or estate may be able to submit a copy of the IRS Tax Account Transcript reflecting the updated federal return information. The amended IT 1041 should be filed no later than 90 days after the IRS completes its review of the federal return. Failure to file the return within this time period may result in an assessment or a denial of the refund claim. The 90 days begins to run when: ● The period for the federal appeal has expired; ● The date on the refund issued by the IRS; OR ● The date a federal settlement agreement is signed. Estate Residency An estate is a resident if the decedent who at the time of death was domiciled in Ohio. See R.C.5747.01(I)(2). See R.C. 5747.10. -8- IT 1041 Rev. 11/21 Schedule I – Taxable Income, Tax, Payments and Net Amount Due Calculations Line 15 – Refundable Business Credits This line must match line 87, the sum of all refundable business credits. Any difference on these lines will result in a delay in processing the return and a possible refund reduction or billing. Line 4 – Trusts- Allocated Qualifying Amount This line must match the summary line 61. Any difference on these lines will result in a delay in processing the return and a possible refund reduction or billing. Line 18 – The Amount of Line 17 to be Credited Toward Next Year’s Liability This line must match the summary line 64. Any difference on these lines will result in a delay in processing the return and a possible refund reduction or billing. Beginning with filing periods that start on or after January 1, 2020 the credit carryforward of overpayments has been reinstated, however for tax years 2017-2019 the Department did not permit credit carryforwards. A credit carryforward is only allowed on a timely filed, original return; otherwise, any overpayment will be refunded. Line 6 – Trusts - Modified Nonbusiness Income Line 19 – Amount of Line 17 to be Refunded Line 5 – Trusts - Apportioned Income This line must match the summary line 67. Any difference on these lines will result in a delay in processing the return and a possible refund reduction or billing. Interest on Overpayments. Once the return has been verified, if the refund exceeds one dollar it will be refunded to the trust or estate. The trust or estate will receive interest on the refund from the date of payment until the date of the refund if the amount is not refunded within 90 days of the later of the return’s due date, or the date the return was filed. Line 8 – Tax on Ohio Taxable Income (Estates) or Modified Ohio Taxable Income (Trusts) Use Table 2 to compute the tax based upon the amount on line 3 for estates or line 7 for trusts. During the calendar year 2022, the interest rate is 3%. Table 2: TY 2021 Estates and Trusts Income Tax Brackets and Marginal Tax Rates TY 2021 Ohio Taxable Income Brackets See R.C. 5747.11(B) and (C)(1). Line 21 – Interest Due on Late Payment of Tax TY 2021 Ohio Tax $ 25,000 – $ 44,250 $ 346.16 plus 2.765% of excess over $ 25,000 Interest is due on any unpaid tax exceeding one dollar from the unextended due date until the date the tax is paid. An extension of time to file does not extend the payment due date. The interest rate for calendar year 2022 is 3%. $ 44,250 – $ 88,450 $ 878.42 plus 3.226% of excess over $ 44,250 See R.C. 5747.08(G). more than $0 not more than – $ 25,000 1.38462% of Ohio taxable income $ 88,450 – $ 110,650 $2,304.31 plus 3.688% of excess over $ 88,450 Line 22 – Total Amount Due if any More than $ 110,650 $3,123.05 plus 3.990% of excess over $ 110,650 Make payments by: ● Electronic check through an approved software program when filing electronically; ● Sending a personal check/money order with the Ohio UPC; ● Electronic funds transfer (EFT) through the Ohio Treasurer of State. See R.C. 5747.02(A) Line 10 – Credits from Schedules IV, V, IX and E ● Estates should enter the sum of lines 55 and 58 of the IT 1041 and line 11 of the Ohio Schedule E. ● Trusts should enter the sum of lines 74 of the IT 1041 and line 11 of the Ohio Schedule E. ● Schedule E, Nonrefundable Business Credits is available in the searchable Tax Forms section of tax.ohio.gov. For questions regarding the EFT payment program, see the Electronic Funds Transfer Via Ohio Treasurer of State (TOS) at Business Tax - Pay Online on our website at tax.ohio.gov. If $1.00 or less is owed, no payment is necessary. Note: The trust/estate is only entitled to the portion of the credits that relate to the retained earnings in the trust/estate. See R.C. 5747.02(C)(3) Schedule II – Adjustments to Federal Taxable Income Line 12 – Interest Penalty on Underpayment of Estimated Tax Additions The following apply to both trusts and estates except where noted. ● A trust or estate that does not make timely, sufficient estimated payments may be subject to the 2210 interest penalty. A trust or estate filing the IT 1041 should use pages 1 and 2 of the Ohio IT/ SD 2210 to determine if an interest penalty is due, and if so the interest penalty amount. This form is available in the searchable Tax Forms section of tax.ohio.gov. Line 23 – Federal and/or Non-Ohio State or Local Government Interest and Dividends Not Distributed Enter the following: ● Interest and/or dividends paid on obligations or securities from a non-Ohio state; AND/OR ● Interest and/or dividends paid on obligations or securities from a non-Ohio local government. The trust or estate will owe an interest penalty if (i) the Ohio tax due is greater than $500 and (ii) withholdings, timely estimated payments and refundable credits are less than either of the following: Do not include: ● Any amounts already included in federal taxable income; ● Interest and/or dividends paid on obligations or securities from Ohio; ● Interest and/or dividends paid on obligations or securities from an Ohio local government; AND ● Interest and/or dividends paid on obligations or securities from a U.S. territory. ● 90% of the 2021 Ohio tax liability OR ● 100% of the 2020 Ohio tax liability Note: A trust or estate may be subject to the penalty even if it is due a refund when filing its return. See R.C. 5747.09(D) and (E). See R.C. 5747.01(S)(1) and (2). -9- IT 1041 Rev. 11/21 Line 24 – Pass-Through Entity Taxes Paid Add-back Source of Depreciation Amount (§179- Enter PTE tax (from the IT 1140) to the extent that those taxes were deducted in arriving at the federal taxable income. These taxes may be reported to the trust/estate on an IT K-1 or provided with the federal K-1. See R.C. 5747.01(S)(11). 25,000) PTE A operations Note: Such income is not included in the trust’s federal taxable income. See R.C. 5747.01(S)(13). Line 26 – Losses from the Sale or Disposition of Ohio Public Obligations $100,000 PTE B distributive share/ bonus expense Line 25 – Electing Small Business Trust (ESBT) Income Add the distributive share of income from an S corporation. This amount is apportionable business income and must be included on Schedule VII. Do not include on Schedule VIII. Total add-back for tax year: Source of Depreciation See R.C. 5747.001(S)(7) and 5709.76. PTE A operations Line 27 – Reimbursement of Expenses Check the box for the appropriate add-back ratio. Add 5/6 of Internal Revenue Code (IRC) §168(k) bonus depreciation allowed under the IRC Code. Also, add 5/6 of any qualifying §179 depreciation expense. However: Example 1: A trust owns PTE A and PTE A owns PTE B. PTE A has $180,000 subject to add-back for the current tax year. $100,000 is §179 depreciation from PTE A’s business operations. $80,000 is 168(k)depreciation from its distributive share of bonus expense from PTE B. 5/6 $83,333 5/6 $66,667 $150,000 Add-Back – Combined add-back Add-back §168(k) Add-back Amount Ratio (§17925,000) $80,000 $100,000 Add-back Amount 5/6 $83,333 5/6 $53,333 $80,000 $136,666 Example 3: A trust owns PTE A and PTE A owns PTE B. PTE A has $180,000 subject to add-back for the current tax year. $100,000 is §179 depreciation from PTE A’s business operations. $80,000 is 168(k) depreciation from its distributive share of bonus expense from PTE B. The trust’s federal taxable income is ($100,000). The trust would calculate its depreciation add-back as follows: Source of Income Add-back Amount (§17925,000) PTE A operations Add-Back – NOL §168(k) Add-back Ratio $100,000 PTE B distributive share/ bonus expense Total add-back for tax year: $80,000 $100,000 Add-back Amount 6/6 $100,000 6/6 $80,000 $80,000 $180,000 Put the total year add-back amount on line 53 of Schedule IV. ! Using the following lines from federal form 4562, the add-back formula is (line 12 - $25,000) + line 14 + line 25. The sum of these lines is multiplied by the appropriate ratio. Additionally, there is no requirement to make Ohio’s depreciation add-back in either of the following circumstances: ● The depreciation is from a PTE, and the investor owns less than 5% of the PTE. This is true even if the PTE performed the addback on its Ohio filing (i.e. the IT 1140 or IT 4708); OR ● A PTE who increases their Ohio income taxes withheld over the previous year’s by an amount greater than or equal to the sum of §168(k) and/or §179 depreciation amounts. Add-back Amount $80,000 $100,000 Total add-back for tax year: ● Replace “5/6” with “2/3” for employers who increase their Ohio income taxes withholding by an amount equal to or greater than 10 percent over the previous year; OR ● Replace “5/6” with “6/6” for taxpayers who incur a net operating loss (NOL) for federal income tax purposes if the loss was a direct/ indirect result of the §168(k) and/or §179 depreciation expenses. If the amount of qualifying §179 depreciation expense is greater than $200,000, the $25,000 deduction is reduced dollar for dollar for any amount over $200,000 per the IRC as it existed as of December 31, 2002. $100,000 PTE B distributive share/ bonus expense Enter reimbursements received in 2021 for any expenses that the trust/estate deducted on a previously filed Ohio fiduciary income tax return if the amount of the reimbursement was not included in federal taxable income. Line 28 – Bonus Depreciation Expense Add-Back and Schedule XIII, Line 88 $80,000 Add-back Ratio Example 2: A trust owns PTE A and PTE A owns PTE B. PTE A has $180,000 subject to add-back for the current tax year. $100,000 is §179 depreciation from PTE A’s business operations. $80,000 is 168(k) depreciation from its distributive share of bonus expense from PTE B. PTE B increased its Ohio employer withholding for its employees by at least 10% over the previous tax year. The add back ratios will be the same for PTE A and PTE B since the Trust is the taxpayer. Enter any loss resulting from the sale/disposition of Ohio public obligations to the extent that such losses have been deducted in determining federal taxable income. See R.C. 5747.01(S)(9)(b). §168(k) CAUTION To the extent this amount is apportionable, it should be included on Schedule VII. If the amount is apportionable, do not include on Schedule VIII. For additional information, please see the PTE Bonus Depreciation FAQs at tax.ohio.gov and R.C. 5747.01(S)(14) and (A)(20). Line 29 – Personal Exemption (Estates Only) Enter the amount of the personal exemption allowed to the estate pursuant to I.R.C. 642(b). See R.C.5747.01(S)(3). Federal Conformity Adjustments (Estates and Trusts). Line 29 is also for federal conformity adjustments, however, the trust/estate must make all other required adjustments for this line. For more information, see Ohio Conformity Updates at tax.ohio.gov. Line 30 – Expenses Claimed on Ohio Estate Return This line is no longer applicable. Enter -0- on this line. See R.C. 5747.01(S)(8). - 10 - IT 1041 Rev. 11/21 Deductions Line 38 – Farm Income (Trusts Only) The following apply to both trusts and estates except where noted. Deduct the income items described below only to the extent that these amounts have not already been deducted or excluded from federal taxable income. Line 32 – Federal Interest and Dividends Exempt from State Taxation Enter interest and dividend income, to the extent included in federal taxable income, from obligations issued by the United States government or its possessions/territories that are exempt from Ohio tax by federal law. A comprehensive list of deductible interest and dividends can be found in Information Release IT 1992-01 – Exempt Federal Interest Income. Examples of interest income that are not deductible: ● Interest paid by the IRS on a federal income tax refund. ● Interest income from Fannie Maes or Ginnie Maes. See R.C. 5747.01(S)(4). Deduct any amount that a trust was required to report as farm income on its federal 1041 tax return but only if the assets of the trust directly or indirectly include at least 10 acres of land. See R.C. 5747.01(S)(12) and 5713.30. Line 39 – Deduction for Prior Year §168(k) and 179 Depreciation Add-backs Use the table on line 89 to calculate the current deductions from the prior year add-back amounts. Deduct: ● 1/5 of prior year 5/6 add-backs, ● 1/2 of prior year 2/3 add-backs, AND/OR ● 1/6 of prior year 6/6 add-backs, of applicable §168(k) and §179 depreciation add-backs on a prior year’s IT 1041. The deduction must be taken in equal increments in consecutive tax years. If the deduction is missed in a taxable year, any unused portion from any given tax year is not eligible to be carried forward. Instead, the PTE would have to amend the prior years’ returns to claim the deduction. Line 33 – State and Municipal Income Tax Refunds Enter the amount of state and/or municipal income tax refunds included in federal taxable income for the taxable year of this return if the refunds relate to taxes previously claimed as itemized deductions on the decedent’s federal income tax return. See R.C. 5747.01(S)(9)(a). Line 34 – Losses from an ESBT Deduct the distributive share of loss from an S corporation if the loss has not been directly or indirectly deducted in computing the trust’s federal taxable income ! CAUTION To the extent this amount is apportionable, it should be included on Schedule VII. If the amount is apportionable, do not include on Schedule VIII. Deduct only amounts that were added back by the trust/estate on a prior year’s IT 1041. This deduction is available even if the asset is no longer owned by the trust/estate. See R.C. 5747.01(S)(14) and (A)(21). Line 40 – Repayment of Income Reported in a Prior Year Deduct the amount reported as work opportunity tax credit on the federal income tax return. Deduct amounts, described in section 1341(a)(2) of the Internal Revenue Code, that the trust/estate repaid in the current tax year that was received and included in federal taxable income in a prior year if: ● The trust/estate recognized the amount as income on the federal return in a prior year; ● The trust/estate has not deducted this income on any other line on the Ohio income tax return for any tax year; AND ● In the year the trust/estate recognized the income, it did not qualify for either the Ohio resident or nonresident credit. See R.C. 5747.01(S)(5). See R.C. 5747.01(S)(10). ! CAUTION This amount is apportionable business income and must be included on Schedule VII. Do not include on Schedule VIII. Line 35 – Wage and Salary Expense Not Previously Deducted Line 36 – Interest/Gains from Ohio Public Obligations Schedule III – Estate Credits Deduct interest income earned from Ohio public obligations and Ohio purchase obligations if the interest income was included in the federal taxable income. The trust/estate can also deduct any gains resulting from the sale or disposition of Ohio public obligations to the extent that the gain was included in the federal taxable income. The trust/estate can also deduct income from a certain transfer agreement or an enterprise transferred under that agreement if the income was included in the federal taxable income. See R.C. 5747.01(S)(6), 5747.01(S)(7) and 5709.76. The credits listed on Schedule III are only available to an estate. They correspond to the credits found on Ohio’s individual income tax return (IT 1040). Distribution of Credits. When calculating estate credits, do not include any credit amounts that are allocable to a beneficiary. This includes credits based on income that is distributed to a beneficiary instead of being retained by the estate. See R.C. 5747.01(S)(13). Line 37 – Refund or Reimbursements of a Prior Year Deduction Line 43 – Retirement Income Credit Deduct amounts included in the federal taxable income that represent refunds or reimbursements of expenses that were previously deducted on the federal 1041 return. Do not include any amounts shown on line 31. See R.C. 5747.01(S)(9)(a). To qualify for this credit, all of the following must be true: Federal Conformity Adjustments. Line 37 is also for federal conformity adjustments, however, the trust/estate must make all other required adjustments for this line. For more information, see Ohio Conformity Updates at tax.ohio. gov. ● The decedent must have received retirement income from a pension, profit sharing or retirement plan (such as traditional IRAs, 401(k) plans); ● This income is included in the estate’s federal taxable income (e.g. it was not distributed to any beneficiary); ● This income was received on account of the decedent’s retirement; AND ● The decedent has not previously taken the Ohio lump sum retirement credit. - 11 - IT 1041 Rev. 11/21 Line 48 - Campaign Contribution Credit for Ohio Statewide Office or General Assembly Credit Amount Retirement income included in Estates’ taxable income Retirement Income Credit $0 – $ 500 $ 501 – $ 1,500 $ 25 $ 1,501 – $ 3,000 $ 50 $ 3,001 – $ 5,000 $ 80 $ 5,001 – $ 8,000 $ 130 $ 8,001 or more 0 $ 200 The credit is based on the total retirement income included the estate’s taxable income. An estate may claim this credit if the estate contributed money to the campaign committee of a candidate for any of the following Ohio offices: ● Governor / Lieutenant governor ● Secretary of state ● Auditor of state ● Treasurer of state ● Attorney general ● Chief justice of the Ohio Supreme Court ● Justice of the Ohio Supreme Court ● Ohio Board of Education ● Ohio Senate ● Ohio House of Representatives The credit equals the amount contributed during the tax year up to $50 per return. Contributions to local candidates (such as city or county officials) or federal candidates (such as President or U.S. Senator) do not qualify for this credit. The maximum credit per return is $200. See R.C. 5747.055(B). Line 44 – Lump Sum Retirement Credit Note: If the estate takes this credit, it cannot take the retirement income credit on this year’s return or any future return. To qualify for this credit, all of the following must be true: ● The decedent must have received a total lump sum distribution on account of retirement; ● The distribution must have come from a qualified pension, retirement or profit sharing plan; ● This income was included in the estate’s federal taxable income (e.g. it was not distributed to any beneficiary); AND ● The decedent has not previously claimed this credit. Use the Lump Sum Worksheet on page 23 to calculate this credit. See R.C. 5747.055(C). Line 45 – Senior Citizen’s Credit To qualify for this credit, both of the following must be true: ● The decedent was at least 65 as of the date of death; AND ● The decedent has not previously taken the Ohio lump sum distribution credit. The credit is equal to $50 per return. See R.C. 5747.055(F). Line 46 – Lump Sum Distribution Credit Note: If the estate takes this credit, it cannot take the $50 senior citizen credit on this year’s return or any future return. To qualify for this credit, all of the following must be true: ● The decedent was at least 65 as of the date of death; ● The decedent must have received a total lump sum distribution from a qualified pension, retirement or profit sharing plan; ● This income was included in the estate’s federal taxable income (e.g. it was not distributed to any beneficiary); AND ● The decedent has not previously claimed this credit Use the Lump Sum Worksheet on page 23 to calculate this credit. See R.C. 5747.055(G). Line 47 – Child and Dependent Care Credit To qualify for this credit the decedent must have claimed the federal “credit for child and dependent care expenses” on federal form 2441. See Child and Dependent Care Credit Worksheet on page 22. 48a – Scholarship Donation Credit To qualify for this credit, the estate must make a monetary donation to an eligible scholarship granting organization (SGO). The credit equals the lesser of $750 or the total amount you donated to SGOs during the tax year. For a list of eligible SGOs, see tax.ohio.gov/ SGO. See also R.C. 5747.73 Line 49 – Ohio Adoption Credit (Limit $10,000) To qualify for this credit, the decedent must have adopted, during the tax year, a child who was under the age of 18 and not his/her stepchild. This credit is not related to or based on the calculation of the federal adoption credit. Instead, the credit is the greater of $1,500 or the adoption-related expenses, capped at $10,000. For purposes of this credit, “adoption-related expenses” include all of the following: ● Medical care expenses of the birth mother or child in connection with the pregnancy or birth; ● Legal fees, guardian ad litem fees, and court expenses in connection with the adoption; ● Adoption agency fees; AND ● Certain living expenses, not exceeding $3,000, for the birth mother that are incurred during pregnancy. The estate may claim one credit for each adoption. This credit is nonrefundable; however, any unused portion can be carried forward for up to five consecutive years. For more information, see tax.ohio.gov for FAQs (in the “IncomeAdoption Credit” topic). See also R.C. 5747.37 and 3107.055(C). Schedule IV – Estate Ohio Resident Credit To determine the income taxes paid to another state or the District of Columbia, the estate must use IT RCTE. See page 16 for the IT RCTE instructions. The credit equals the lesser of the income taxes paid to another state or the District of Columbia, or the portion of the Ohio tax liability attributable to income taxed by another state. Nonresident estates are not entitled to this credit. See R.C. 5747.05(B). Schedule V – Estate Nonresident Credit See R.C. 5747.054 Nonresident estates should enter the portion of Ohio taxable income on line 3 that is not apportioned or allocated to Ohio. - 12 - IT 1041 Rev. 11/21 To determine the portion of the Ohio taxable income (IT 1041, line 3) that is not apportioned or allocated to Ohio, the estate must use form IT NRCE obtained at tax.ohio.gov. Include this form with the IT 1041. Ohio taxable income after such taxable income is first reduced by the qualifying trust amount, if any. Electing Small Business Trust (ESBT) income is apportionable to Ohio as modified business income and is reported in Schedule VII. See R.C. 5747.01(AA)(1) and 5747.01(S)(13) See R.C. 5747.05(A), 5747.20, 5747.21 and R.C. 5747.231. ● Qualifying investment income/loss: Income attributable to transaction fees for the acquisition, ownership, or disposition of intangible property, including the: ● Loan fees; ● Financing fees; ● Consent fees; ● Waiver fees; ● Application fees; ● Net management fees; ● Dividend income; ● Interest income; ● Net capital gains from the sale, exchange, or other disposition of intangible property; AND ● All types and classifications of income from distributive shares of income from other PTEs. ● This list is not all inclusive. See R.C. 5747.012. Schedule E – Nonrefundable Business Credits Use Schedule E to claim nonrefundable business credits. The trust/ estate may obtain Schedule E at tax.ohio.gov. ! CAUTION Trust/estate is only entitled to the portion of the Schedule E credit that relates to the retained earnings in the trust/estate. See R.C. 5747.02(C)(3). Schedule VI – Allocated Qualifying Trust Amounts Line 59 – Allocated Qualifying Trust Amounts A trust’s income is a “qualifying trust amount” if all of the following are true: ● The income is included in the trust’s Ohio taxable income (IT 1041, line 3); ● The income is a capital gain or loss from the sale, exchange or other disposition of either an ownership interest in, or debt obligations of, a qualifying investee; ● The trust owns at least 5% of the qualifying investee at any time during the 10-year period ending on the last day of the trust’s tax year; AND ● The book value of the qualifying investee’s physical assets is available. See R.C. 5747.01(AA)(1) and 5747.013 A “qualifying investee” is any entity in which a trust has an ownership interest, or an entity or unit of government in which the trust owns debt obligations. Information is “available” if it can be obtained by the trust’s due date for filing the IT 1041. Nonresident trusts enter the following types of nonbusiness income to the extent included in the trust’s Ohio taxable income (line 3) and not reported on lines 59 or 62: Schedule VIII – Allocated Nonbusiness Income for Trusts Line 65 - Resident Trusts: Trust’s Portion of Ohio Taxable Income Resident trusts enter the trust’s Ohio taxable income (line 3) not reported on lines 59 or 62. Line 66 - Nonresident Trusts: Trust’s Portion of Ohio Taxable Income See R.C. 5747.01(AA)(2),(5) and (6) and 5747.011. See also T. Ryan Legg Irrevocable Trust v. Testa, 2016-Ohio-8418. ● Capital gains or losses from the sale, exchange or transfer of Ohio real property and/or Ohio-based tangible personal property; ● Rents and royalties from Ohio real property and/or tangible personal property used in Ohio, ● Patents and copyright royalties used by the payor in Ohio; AND ● Ohio Lottery Commission winnings and gains and/or losses from the sale or transfer of such winnings. Line 60 - Percentage of Closely Held Investee’s Physical Assets Located Within Ohio Note: If distributive share is business income/loss from a passthrough entity, use Schedule VII. The percentage is calculated as follows: See R.C. 5747.01(AA)(3). Most income is not a qualifying trust amount. Instead, it is modified business income, qualifying investment income, or modified nonbusiness income. Schedule IX – Ta
Extracted from PDF file 2021-ohio-form-it-1041-instructions.pdf, last modified December 2021

More about the Ohio Form IT 1041 Instructions Corporate Income Tax TY 2021

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Form IT 1041 Fiduciary Income Tax Return
Form IT 1041ES Ohio Estimated Income Tax Payment Coupon for Estates and Trusts
Form IT 1041 UPC Payment Voucher for Pass-Through Entity/Fiduciary Income Tax
Form IT 1041P Ohio Income Tax Payment Coupon for Estates and Trusts (OBSOLETE)

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About the Corporate Income Tax

The IRS and most states require corporations to file an income tax return, with the exact filing requirements depending on the type of company.

Sole proprietorships or disregarded entities like LLCs are filed on Schedule C (or the state equivalent) of the owner's personal income tax return, flow-through entities like S Corporations or Partnerships are generally required to file an informational return equivilent to the IRS Form 1120S or Form 1065, and full corporations must file the equivalent of federal Form 1120 (and, unlike flow-through corporations, are often subject to a corporate tax liability).

Additional forms are available for a wide variety of specific entities and transactions including fiduciaries, nonprofits, and companies involved in other specific types of business.


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