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2013 Instructions for Form 541-QFT

California Income Tax Return for Qualified Funeral Trusts (QFTs)

References in these instructions are to the Internal Revenue Code (IRC) as of January 1, 2009, and to the California Revenue and Taxation Code (R&TC).

General Information

for multiple QFTs having the same trustee,

determined in accordance with the beneficiary’s

following the rules discussed under General

interest in the trust . A beneficiary’s interest in a

In general, for taxable years beginning on or

Information C, Composite Tax Return .

trust may be determined under any reasonable

after January 1, 2010, California law conforms

method .

An election to file as a QFT for federal purposes

to the Internal Revenue Code (IRC) as of

is considered an election for California

Whenever these instructions refer to a trust or

January 1, 2009 . However, there are continuing

purposes . A separate election is not allowed .

QFT, it includes such separate interests that are

differences between California and federal law .

treated as separate QFTs .

When California conforms to federal tax law

Trustees must use Form 541-QFT to:

changes, we do not always adopt all of the

• Report income received by a QFT .

C Composite Tax Return

changes made at the federal level . For more

• Report income that is either accumulated or

information, go to ftb.ca.gov and search for

A trustee may file a composite Form 541-QFT

distributed currently to the beneficiaries .

conformity .

for all QFTs of which he or she is the trustee

• Report any applicable tax liability of the

including QFTs that have short taxable years .

The instructions provided with California tax

fiduciary .

Get federal Form 1041-QFT, U .S . Income Tax

forms are a summary of California tax law

• File an amended tax return for the QFT .

Return for Qualified Funeral Trusts, for more

and are only intended to aid taxpayers in

Pre-need funeral trusts that do not qualify as

information .

preparing their state income tax returns . We

QFTs should get the instructions for Form 541,

include information that is most useful to the

California Fiduciary Income Tax Return, for

D When to File

greatest number of taxpayers in the limited

their filing requirements .

space available . It is not possible to include

For calendar year estates and trusts, file

For tax purposes, a trust will generally be

all requirements of the California Revenue

Form 541-QFT by April 15, 2014 . The due date

regarded as a separate entity . However, if

and Taxation Code (R&TC) in the tax booklets .

for a composite tax return is also April 15,

there is an unlawful shifting of income from

Taxpayers should not consider the tax booklets

2014, even if the tax return includes QFTs that

the individual who has earned that income to

as authoritative law .

terminated during the year .

a trust, the trust will no longer be treated as

Contribution Limits

If the QFT needs an extension of time to file

a separate entity and the income will be taxed

For taxable years beginning on or after

and owes an unpaid tax liability, get form

to the individual who earned the income . If

January 1, 2010, California conforms to the

FTB 3563, Payment for Automatic Extension

the individual who established the trust has a

federal law which repealed contribution limits .

for Fiduciaries . If you are filing for a short

substantial ability to control the assets, all of the

Qualified Funeral Trusts (QFTs) are no longer

taxable year, file Form 541-QFT by the 15th day

income will be taxed to that individual . Unless

limited to a defined contribution amount .

of the 4th month following the close of the

specifically allowed by the California R&TC and

short taxable year . The QFT has an additional

Internet Access

the IRC, deduction of personal living expenses

six months to file without filing a written

You can download, view, and print California

by an individual or trust is not allowed .

request for extension . However, to avoid late

tax forms and publications at ftb.ca.gov .

B Qualified Funeral Trust

payment penalties, 100% of the tax liability

Access other California state agency websites

must be paid by the original due date of the tax

at ca.gov .

A QFT is a domestic trust that meets all of the

return .

following requirements:

Estimated Tax Payments

If the QFT does not file the tax return by the

Estimated tax payments shall be paid in the

• Arises as a result of a contract with a

extended due date, we will impose late filing

following percentages of the required annual

person engaged in the trade or business

penalties and interest on any tax due from the

payment:

of providing funeral or burial services or

original due date of the tax return .

property to provide such services .

1st Payment – 30%

• The sole purpose of the trust is to hold,

E Where to File

2nd Payment – 40%

invest, and reinvest funds in the trust and to

3rd Payment –

If a tax is due, mail the tax return and

use those funds solely to pay for funeral or

4th Payment – 30%

payment to:

burial services or property to provide such

QFTs with a tax liability less than $500 do not

services for the benefit of the beneficiaries

FRANCHISE TAX BOARD

need to make estimated tax payments .

of the trust .

PO BOX 942867

QFTs with an adjusted gross income equal to

• The only beneficiaries are individuals for

SACRAMENTO CA 94267-0001

or greater than $1,000,000 must compute the

whom such services or property are to be

Using black or blue ink, make the check or

annual estimated tax requirement based on

provided at their death under the contracts

money order payable to the “Franchise Tax

the current year income . Get Form 541-ES,

described above .

Board .” Write the QFT’s federal employer

Estimated Tax for Fiduciaries, for more

• The only contributions to the trust are made

identification number (FEIN) and “2013

information .

by or for the beneficiaries’ benefit .

541-QFT” on the check or money order .

• The trustee makes the election to treat the

Third Party Designee

Do not mail cash .

trust as a QFT .

The trustee can designate a third party to

Make all checks or money orders payable in

discuss the tax return with the Franchise

• If the QFT election had not been made, the

U .S . dollars and drawn against a U .S . financial

Tax Board (FTB) . For more information, see

trust would have been treated as owned by

institution .

the purchasers of the contracts under the

General Information G, Who Must Sign .

If there is a refund or no amount is due, mail

grantor trust provisions of the IRC .

A Purpose

the tax return to:

If a QFT has multiple beneficiaries, each

The trustee of a trust that has elected to

FRANCHISE TAX BOARD

beneficiary’s separate interest under a contract

be taxed as a QFT can use Form 541-QFT,

PO BOX 942840

is treated as a separate QFT for the purpose of

California Income Tax Return for Qualified

SACRAMENTO CA 94240-0001

figuring the tax and filing this tax return . Each

Funeral Trusts, to file for a single QFT or

beneficiary’s share of the trust’s income is

Form 541-QFT Instructions 2013 Page 1

Instructions For Form 541-Qft - California Income Tax Return For Qualified Funeral Trusts (Qfts) - 2013

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