Detailed Answer — When must an estate file a federal tax return?

Three different federal filings can come into play after someone dies. Whether any of them is required does not turn only on whether the executor distributed estate funds. It turns on whether the estate earned income, whether the estate’s gross value exceeds the federal estate tax filing threshold, and whether the decedent needed to file a final individual return.

1) Federal fiduciary income tax return (Form 1041)

The estate itself must file a federal income tax return (Form 1041) if, during the estate’s tax year, the estate has gross income of $600 or more, or if any beneficiary is a nonresident alien. Gross income includes interest, dividends, rents, business income, and capital gains generated by estate assets while the estate is administering the decedent’s affairs. The rule applies whether or not the estate made distributions to beneficiaries.

See the IRS Form 1041 guidance for full filing rules and thresholds: About Form 1041 (IRS).

Hypothetical examples:

• If the estate’s bank accounts and investments produced $350 of interest for the year and no beneficiary is a nonresident alien, Form 1041 is not required because gross income is under $600.
• If the estate earned $1,200 of interest or realized capital gains during administration, the estate must file Form 1041 even if the executor kept the money in estate accounts and made no distributions.
• If a beneficiary is a nonresident alien, the estate must file Form 1041 regardless of income level.

2) Federal estate tax return (Form 706)

Form 706 (the federal estate tax return) is a different filing. It reports the value of the decedent’s gross estate and certain lifetime gifts. You must file Form 706 only when the decedent’s gross estate (plus certain adjustments such as prior taxable gifts) meets or exceeds the federal filing threshold for the year of death. The filing threshold changes over time; consult the Form 706 instructions for the current exemption and filing rules: About Form 706 (IRS). Whether or not the estate made distributions does not affect the Form 706 filing requirement.

3) Final individual income tax return for the decedent (Form 1040)

The decedent’s final individual income tax return (their last Form 1040) must be filed for the tax year of death if the decedent otherwise had a filing requirement for that year. This return covers the decedent’s income from the start of the year through the date of death. It is separate from the estate’s return for post‑death income. For guidance on filing a final return for a deceased person, consult IRS instructions for individual returns and the Form 1041 guidance as needed.

Key filing deadlines and extensions

• Form 1041: Due on the 15th day of the fourth month after the close of the estate’s tax year (for a calendar‑year estate, this is generally April 15). Executors may request an automatic extension — see the Form 1041 instructions for extension procedures.
• Form 706: Due within nine months after the decedent’s date of death (automatic six‑month extension may be available if requested timely).
• Final Form 1040 for the decedent: Filed by the normal individual return due date (generally April 15), with standard extension rules applying.

Virginia-specific note

Virginia does not impose a separate estate or inheritance tax on estates. That means you generally will not file a Virginia estate tax return. For state income tax questions relating to income generated by estate assets (for example, interest earned by estate accounts), check the Virginia Department of Taxation guidance: Virginia Department of Taxation. Executors should also confirm whether beneficiaries must report estate income on their Virginia returns when they receive distributions.

Practical summary

If the estate produced less than $600 of gross income in the estate’s tax year, and no beneficiary is a nonresident alien, you will not need to file Form 1041 solely because the estate made no distributions. However:

• If the estate earned $600 or more in gross income, file Form 1041 even if you made no distributions.
• If any beneficiary is a nonresident alien, file Form 1041 regardless of income level.
• If the decedent’s gross estate meets or exceeds the federal estate tax filing threshold, file Form 706 even if you made no distributions.
• File the decedent’s final Form 1040 when required by normal individual filing rules.

For more on Form 1041 and the filing rules: https://www.irs.gov/forms-pubs/about-form-1041. For more on Form 706 and federal estate tax filing rules: https://www.irs.gov/forms-pubs/about-form-706.

Helpful Hints for Virginia Executors

• Gather all estate accounting records: bank statements, brokerage statements, Form 1099s for interest/dividends, and records of any asset sales.
• Track income while the estate is open — interest, dividends and capital gains count toward the estate’s gross income.
• Check beneficiary residency. A nonresident alien beneficiary triggers a Form 1041 filing requirement even with very small estate income.
• Don’t confuse “no distributions” with “no income.” Estates often earn interest and dividends while assets remain in estate accounts.
• File the decedent’s final Form 1040 if they meet the normal filing threshold for that year. The final return is separate from any estate return.
• If you expect to owe estate income tax or need extra time to prepare, file for extensions promptly — penalties can attach for late filing.
• Virginia has no state estate or inheritance tax, but confirm whether state income tax applies to estate income or to beneficiary distributions via the Virginia Department of Taxation: https://www.tax.virginia.gov/.
• When in doubt, consult a competent tax professional or an attorney experienced in estate administration — they can review estate records and confirm filing obligations.