Idaho State Tax Commission

Income Tax for Fiduciaries

tax.idaho.gov/busit-fid

Definition

A fiduciary is a guardian, trustee, executor, administrator, receiver, conservator, or any person acting in a position of trust or fiduciary capacity for any other person or group of persons.

Estates and trusts generally pass income through to their beneficiaries. The beneficiaries then pay individual income tax when they file their tax returns. An estate or trust also can have Idaho taxable income.

Requirements to file

If you're filing for a foreign trust that's required to file a federal Form 1040NR, file on Idaho Form 43.

A fiduciary must file Form 66, Idaho Fiduciary Income Tax Return, when any of the following circumstances apply:

Resident estate

Gross income* of $600 or more for the current tax year.

Nonresident estate

Gross income* from Idaho sources of $600 or more for the current tax year.

Resident trust (including grantor trust)

Gross income* of $100 or more for the current tax year and required to file a federal return.

Nonresident trust (including grantor trust)

Gross income* from Idaho sources of $100 or more for the current tax year and required to file a federal return.

Resident IRA trust or other trust

Required to file federal Form 990‑T to report unrelated business taxable income.

Nonresident IRA trust or other trust

Required to file federal Form 990‑T to report unrelated business taxable income with gross income from Idaho sources of $100 or more for the current tax year.

Gross income includes the trust's share of gross income of a pass-through entity.

Estate of resident individual in Chapter 7 or Chapter 11 bankruptcy**

Gross income* of $9,500 or more.

* Gross income as defined in Internal Revenue Code (IRC) section 61(a)

** Title 11, U.S. Bankruptcy Code

Residency of estates

An estate is a resident estate if the decedent was domiciled in Idaho on the date of death. An estate that isn't an estate of a decedent is a resident estate if the person the estate was created for is an Idaho resident.

If the estate doesn't qualify as a resident estate, it's a nonresident estate.

A nonresident estate reports income earned from Idaho sources the same way a nonresident individual would.

Residency of trusts

A trust is a resident trust if at least three of the following occur:

  • The grantor is domiciled or resides in Idaho.
  • The trustee is domiciled or resides in Idaho.
  • The trust is governed by Idaho law.
  • The trust property is in Idaho.
  • The trust is administered in Idaho. This includes conducting trust business, investing assets, making policy decisions, keeping records, or filing tax returns.

If the trust doesn't qualify as a resident trust, it's a nonresident trust.

A nonresident trust with income earned from Idaho sources must report that income to Idaho the same way a nonresident individual would. Idaho doesn't distinguish between living trusts (created by the grantor and funded during the grantor's lifetime) and testamentary trusts (becoming operative when the grantor dies). If a trust isn't required to file a federal return, it isn't required to file an Idaho return.

Grantor trusts

Trust income taxable to the grantor or another person under IRC sections 671 through 678 isn't taxed on a fiduciary return. You must show the income information on a separate statement attached to federal Form 1041. Include a copy of that information statement with Form 66. Also include a supplemental statement with Form 66 showing Idaho additions and subtractions to federal taxable income.

Other business entities

Still not sure you should file a business income tax return as a fiduciary? Explore the other business entity types that must file an Idaho tax return:

Tax rates

Fiduciary tax rates are graduated so higher earnings are taxed at a higher rate. See the Idaho Fiduciary Tax Computation Schedule in the instructions for Form 66.

Estates and trusts generally pass income through to their beneficiaries. The beneficiaries then pay individual income tax when they file their tax returns.

Tax due for nonresident individual beneficiaries

The trust or estate can pay the tax on a nonresident individual beneficiary's income from the trust or estate.

The trust or estate is taxed on this income at the corporate rate of 6.925%. Find more information, including Forms PTE‑12 and PTE‑01, on our Pass-through Entity page.

What to file

Include a complete copy of your federal income tax return with your Idaho fiduciary income tax return.

Idaho might require an Idaho individual income tax return, Form 40 or Form 43, for the last tax year of a decedent or for a beneficiary of a guardianship trust or estate. See the Idaho Individual Income Tax booklet for filing requirements.

If the IRS requires you to file federal Form 1041‑A for federal income tax purposes, file a copy of that form with the Idaho State Tax Commission. Mark the copy "Idaho Informational Copy."

Assembling your tax return

To make sure your return is correctly processed, include all forms and schedules in the following order:

Find all business income tax forms for the current year.

Find business income tax forms for prior years.

Amended returns

Use Form 66 to amend your Idaho income tax return. Make sure you check the Amended Return box and enter the reason for amending.

If you amend your federal return, you must file an amended Idaho return. The Idaho statute of limitations for receiving a refund is three years from the due date of the return or the date the return was filed, whichever is later.

When to file

File your Idaho income tax return on or before the 15th day of the fourth month following the close of your tax year. For a calendar year filer, this is April 15.

If the last day for filing a return falls on a Saturday, Sunday, or legal holiday, the return is on time if you file it on the next business day.

Please contact us if you forgot to file a tax return.

Extensions

Learn more on our Valid Extension for Filing page.

Penalties and interest

Learn more on our Penalties and Interest page.

Where to file

E-file your return

The Tax Commission, with the IRS, allows electronic filing of federal and state fiduciary income tax returns. To see a list of software companies that provide this service, visit our Filing Business Income Taxes Online page.

Mail your return

See our mailing address information on our Contact Us webpage.

Payments

Visit our E-pay page for more information about electronic payments.

Federal regulations

Idaho follows federal regulations on the following items:

  • Accounting methods and period: Any changes must have prior approval from the IRS. Include a copy of the federal approval with your return.
  • Bonus Depreciation for property acquired during 2008 and 2009: Learn more on our Bonus Depreciation page.
  • Electing Small Business Trust (ESBT): If the trust is an ESBT for federal purposes, it's treated as an ESBT for Idaho income tax purposes. You don't need a separate election for Idaho. Learn more about ESBT below.

Federal audit

If your federal taxable income or tax credits change because of a federal audit, you must send written notice to the Tax Commission within 120 days of the final federal determination (see Rule 890). Include copies of all IRS schedules.

  • If you owe more Idaho tax and don't send the written notice within 120 days, we must apply a 5% penalty and charge interest on the tax due.
  • If you're owed an Idaho refund, you must file an amended Idaho income tax return to get the refund. The Idaho statute of limitations for receiving a refund is three years from the due date of the return or the date you filed the return, whichever is later. If the statute-of-limitations period has ended, you have one year from the date of the final determination to file for the refund.

Net operating loss (NOL)

An estate or trust has an NOL in a year when its Idaho taxable income is less than zero. You can't subtract NOLs incurred in activities that Idaho doesn't tax.

Idaho calculates the Idaho NOL differently than the IRS calculates the federal NOL. So, you always must add back the NOL claimed on your federal income tax return.

You can use an NOL by deducting it from your income in another year or years. Include Form 56 or your own schedule with your Idaho return for any year you carry the NOL to.

VIDEO: Idaho NOL: 5 most common mistakes

Pass-through entities

Visit our Pass-Through Entities page at tax.idaho.gov/pte.

Electing small business trust (ESBT)

Special rules apply when calculating the tax of an ESBT. The portion of an ESBT that consists of stock of one or more S corporations is treated as a separate trust in calculating the tax attributable to the S corporation stock that the trust holds.

  • The ESBT must pay this tax.
  • You must calculate this tax separately from the tax on the remainder of the ESBT at the maximum individual rate of 6.925%. Include the tax calculation with the return.
  • Enter this tax on Form 66, line 21.

Calculate the tax on the remainder of the ESBT in the normal way on Form 66. Don't include the S corporation items when calculating this tax or distributable net income. Don't apportion any of the S corporation items to the beneficiaries.

If the ESBT consists entirely of stock in one or more S corporations, don't make any entries on page 1, lines 4 through 15. Instead:

  • Complete the heading area and lines 1 through 3.
  • Follow the instructions for line 21 for computing the tax on the S corporation items and enter the amount of tax.
  • Complete the rest of the return.

Qualified disability trusts (QDT)

A QDT is any nongrantor trust described in 42 U.S.C. 1396p(c)(2)(B)(iv):

  • The trust is established solely for the benefit of an individual over 65 years of age who's disabled, and
  • The Commissioner of Social Security has determined all the beneficiaries have been disabled for some part of the tax year according to 42 U.S.C. 1382c(a)(3).

Qualified funeral trusts (QFT)

Special rules apply to the taxation of a QFT for trustees who elect to use these rules.

A QFT is a domestic trust that meets all the following requirements:

  • It was a result of a contract with a person engaged in the trade or business of providing funeral or burial services or property necessary to provide these services.
  • The sole purpose of the trust is to hold, invest, and reinvest funds in the trust and to use those funds solely to pay for funeral or burial services or property to provide these services for the benefit of the beneficiaries of the trust.
  • The only beneficiaries are individuals whose services or property will be provided at their death under the contracts described in the first bullet.
  • The only contributions to the trust are made by, or for, the benefit of these beneficiaries.
  • The trustee makes, or previously had made, the election to treat the trust as a QFT.
  • If the election hadn't been made, the trust would have been treated as owned by the purchasers of the contracts under the grantor trust provisions of the IRC. However, a trust that isn't treated as owned by the purchaser solely because of the death of an individual is treated as meeting this requirement during the 60‑day period beginning on the date of the individual's death.
Composite return

If a person is the trustee of more than one QFT, the trustee can file one composite return for all the QFTs. Include a schedule with the composite Form 66 that includes the following information for each separate interest treated as a separate QFT:

  • The owner's name designated as the trust beneficiary. If you list the owner's name and that trust has more than one beneficiary, you must separate the trust into shares that the separate beneficiaries hold.
  • The type and gross amount of each type of income the QFT earned for the tax year.
  • The type and amount of each deduction and credit allocable to the QFT.
  • The tax and payments made for each QFT.
  • The termination date if the QFT was terminated during the year.
Residency of QFTs

A QFT is treated as a resident if either of the following are true:

  • The QFT is required to be established under the laws of Idaho at initial funding.
  • An Idaho funeral home or cemetery is identified to provide the services or merchandise under the terms of a preneed contract.

Visit the Income Tax Hub for links to related guides.

Keeping records

Keep copies of your tax returns and all supporting documents for at least seven years. Visit the IRS website for more information about record keeping.

Businesses exercising the option to carry back or carry forward need to keep records for all affected years.

Laws and rules

Learn more about Idaho business income tax:

Last updated August 20, 2020. Last full review of page: August 20, 2020

This information is for general guidance only. Tax laws are complex and change regularly. We can't cover every circumstance in our guides. This guidance may not apply to your situation. Please contact us with any questions. We work to provide current and accurate information. But some information could have technical inaccuracies or typographical errors. If there's a conflict between current tax law and this information, current tax law will govern.