No Estate Tax Doesn’t Mean No Tax Return: A Missouri Executor’s Form 1041 Obligations

Very few Missouri estates will ever owe federal estate tax. Many of them still have to file an income tax return with the IRS, and an executor who skips that return can end up personally answerable for what follows.

When a family member is named executor (Missouri law calls the role “personal representative” in probate), the first tax question is usually whether the estate owes estate tax. For nearly every Missouri family, the answer is no. The federal exclusion is $15 million per person in 2026, and Missouri does not impose its own estate or inheritance tax.

That answer is correct, but it addresses only one of the taxes an executor is responsible for. From the moment of death, the estate becomes a separate taxpayer for federal income tax purposes. Money the decedent’s assets earn after death, such as interest, dividends, rent, and gain on a sale, belongs to the estate, and the executor must report it. This article explains when that reporting obligation arises, what it costs to ignore it, and how Missouri’s fiduciary return fits in.

Two different taxes, two different questions

The estate tax is a one-time tax on the value of everything the decedent owned at death. It is reported on Form 706 (see estate tax and complex administrations) and applies only when the estate exceeds the exclusion (or when a surviving spouse wants to preserve the unused exclusion through a portability election). The estate income tax is an annual tax on what the estate’s assets earn while the executor is administering them. It is reported on Form 1041, and it has nothing to do with the size of the estate.

The executor is also responsible for the decedent’s own final Form 1040 covering January 1 through the date of death, and for any prior-year individual returns the decedent never filed. IRS Publication 559 lists filing all of these returns, and paying the tax they show, among the personal representative’s core duties.

The $600 threshold

Under the IRS instructions for Form 1041, the fiduciary of a domestic decedent’s estate must file the return for any tax year in which the estate has gross income of $600 or more, or in which any beneficiary is a nonresident alien. The nonresident-alien rule applies regardless of how little income the estate has.

Two features of that rule catch executors off guard. First, the test is gross income, not taxable income. An estate receives a $600 exemption deduction and a deduction for income it distributes to beneficiaries, so many estate returns show little or no tax. The filing requirement applies anyway. Second, $600 is a low number. An estate holding a modest savings account, a brokerage account, or a rental house for a few months can cross it without anyone noticing.

Where the decedent used a revocable living trust, much of this income may be earned by the trust rather than a probate estate. The trust becomes irrevocable at death, needs its own taxpayer identification number, and has its own filing obligations. (For the trustee’s side of that work, see trust administration.) The trustee and executor can elect under section 645 (on Form 8855) to treat the trust as part of the estate for income tax purposes, which permits a single return and a fiscal tax year. That election has its own deadline and should be considered early.

Tax year and deadlines

An estate’s first tax year begins on the date of death. The executor may choose a calendar year or a fiscal year ending on the last day of any month, provided the first year is no longer than 12 months. The return is due on the 15th day of the fourth month after the tax year closes (April 15 for a calendar-year estate), and Form 7004 provides an automatic extension of five and one-half months to file, though not to pay. An estate is generally not required to make estimated tax payments for tax years ending within two years after the death.

The bracket figure matters. Estate income that is retained rather than distributed is taxed on a compressed schedule: under the IRS’s 2026 inflation adjustments (Rev. Proc. 2025-32), an estate reaches the top 37% rate at just $16,000 of taxable income. Income distributed to beneficiaries generally shifts to them through Schedule K-1 and is taxed at their individual rates, which is one reason the timing of distributions deserves attention.

What happens if the executor does not file

Executors sometimes reason that if the estate owes no tax, a missed return costs nothing. That is partly true and mostly incomplete.

Penalties and interest

The federal failure-to-file penalty is 5% of the unpaid tax for each month or partial month the return is late, up to 25%. For a return more than 60 days late, the minimum penalty is the smaller of $525 or the tax due (the figure in the current Form 1041 instructions). Because the penalty is measured by tax due, a late return that shows no tax generally draws no failure-to-file penalty. Where tax is owed, a separate failure-to-pay penalty of one-half percent per month (also capped at 25%) and interest accrue as well.

Two further points limit the comfort of the “no tax, no penalty” reasoning. The IRS instructions impose a separate penalty, currently $340 per statement, for each Schedule K-1 not furnished to a beneficiary on time or furnished with incorrect information, and that penalty is not tied to the estate’s own tax. And Publication 559 states plainly that relying on an attorney or accountant is not reasonable cause for a late return. The duty to file belongs to the executor.

The limitations period never begins

Ordinarily the IRS has three years after a return is filed to assess additional tax. Under 26 U.S.C. § 6501, when no return is filed, tax may be assessed at any time. An unfiled estate return leaves the estate’s income tax exposure open indefinitely.

The unfiled return also forecloses the two tools executors use to close out their federal exposure. After filing, an executor may request a prompt assessment on Form 4810, which shortens the IRS’s assessment window to 18 months from receipt of the request. The executor may also request discharge from personal liability for the decedent’s income, gift, and estate taxes on Form 5495; if the IRS does not respond within nine months, or the executor pays the amount it identifies, the executor is discharged from personal liability for later deficiencies. Both requests depend on returns having been filed.

Personal liability for the executor

The most serious exposure is personal. Under the federal priority statute, 31 U.S.C. § 3713, when an estate cannot pay all of its debts, claims of the United States must be paid first. Publication 559 explains that both the decedent’s unpaid income tax and the estate’s own income tax are debts owed to the United States, and that a personal representative who pays other creditors or beneficiaries first may be personally liable to the extent of those payments. The IRS’s position is that the liability can attach where the executor knew of the tax, or failed to use due care to find out, before distributing assets. The tax need not have been formally assessed.

In practice, the risk arises when an executor distributes the estate, closes the probate, and later receives an IRS notice for income the estate earned and never reported. If the money is gone, the executor may be asked to answer for it, and the beneficiaries who received it may face transferee claims. Distributing too early is one of the common mistakes executors and successor trustees make, and it is closely tied to an executor’s broader fiduciary duties.

An estate that owes no estate tax is not an estate that owes nothing to the IRS. The income tax return is where that difference is reconciled, and the executor is the person who signs it.

Lost tax benefits for the beneficiaries

Filing can also help. When an estate terminates, its unused capital loss carryovers, net operating loss carryovers, and excess deductions in its final year (often legal, accounting, and executor fees exceeding final-year income) pass through to the beneficiaries on their Schedules K-1. Those items reach the beneficiaries only through a filed final Form 1041. An estate below the $600 threshold in its last year may still benefit from filing for this reason alone. Conversely, when an estate distributes income and issues no K-1s, beneficiaries have no reliable way to report that income correctly on their own returns.

The Missouri fiduciary return

According to the Missouri Department of Revenue, every resident estate that is required to file a federal Form 1041 must also file Form MO-1041, and a nonresident estate must file if it has $600 or more of gross income from Missouri sources. The Missouri return is due on the same schedule as the federal return, uses the federal taxpayer identification number, and is automatically extended when a federal extension is filed (a copy of Form 7004 is attached). The Department’s guidance describes additions to tax of 5% per month for late filing, capped at 25% of the unpaid balance, and 5% for late payment.

Two recent Missouri changes are worth noting for accuracy:

A working checklist for Missouri executors

Disclaimer: This article is for general educational purposes only and is not legal or tax advice. Reading it does not create an attorney-client relationship with Haake Law Group, PC. Tax laws, thresholds, and penalty amounts change, sometimes annually, and failing to meet filing obligations can carry penalties and personal liability. Figures cited are drawn from the IRS and Missouri Department of Revenue sources linked above as of September 2026; verify current requirements with the IRS and the Missouri Department of Revenue, and consult a qualified attorney or tax professional about your specific situation.