What You Need to Know About IRS Form 8855 And Its Tax Implications

As an executor or trustee, you may need to make a variety of difficult decisions about a decedent’s revocable trust. This process may force you to deal with several confusing IRS documents, which should be filed in a timely manner to help trustees take advantage of numerous tax benefits.

IRS Form 8855, in particular, is important, as it determines whether trusts and estates are treated as separate entities or handled together. Keep reading to determine whether you might benefit from completing this document, and if so, how to proceed.

What Is IRS Form 8855?

Also known as the “Election to Treat a Qualified Revocable Trust as Part of an Estate,” IRS Form 8855 allows executors and trustees for qualified revocable trusts to make section 645 elections. This, in turn, allows the trust and estate in question to be treated as a single entity for tax purposes.

What Are the Benefits of Completing IRS Form 8855?

Form 8855 can offer a variety of tax benefits for executors and trustees. Without the election offered via this form, separate entities may come into play, potentially resulting in the creation of an irrevocable trust.

If there is a downside to completing this form, it’s that the election contained therein cannot be revoked. For this reason, it’s important to think through this decision carefully and, if concerned about its implications, seek guidance from a trusted tax representative.

What Information Should Form 8855 Include? When Is it Due?

Form 8855 primarily includes basic details about the executor, estate, and decedent, including names and contact information. Executors and trustees will need to sign and date this document under penalties of perjury.

The document should be filed by the due date listed for Form 1041 for the first year of the filing trust or estate. This due date applies even if there’s not enough income available to warrant filing Form 1041.

Not sure if you should complete Form 8855 and make a section 645 election? The Highland Tax Group can provide the insight you need as you handle this and other tax concerns related to estate planning. Reach out today for more information.