How to Complete and File Kentucky Form 741: Fiduciary Income Tax Return

Kentucky Form 741 is the state fiduciary income tax return that an executor or trustee files to report income earned by an estate or trust. The return starts from your federal Form 1041, applies Kentucky-specific adjustments, and uses a 3.5 percent tax rate for tax years beginning on or after January 1, 2026.¹ Calendar-year filers must mail it to the Kentucky Department of Revenue in Frankfort by April 15, with a complete copy of the federal 1041 attached.

Who Has to File

Filing is triggered by gross income, and the threshold depends on the entity type. A resident estate files when gross income reaches $1,200 or more for the year. A resident trust files at just $100 or more. Nonresident estates and trusts use the same dollar thresholds, but only count gross income from Kentucky sources.²

A resident estate or trust is taxed on all taxable income except what is distributed or distributable to beneficiaries and the portion of intangible-property income attributable to a nonresident beneficiary. The income tax rates that apply to individuals under KRS 141.020 also apply to fiduciaries,³ which puts the 2026 rate at 3.5 percent of Kentucky taxable income. The standard deduction allowed to individuals is not available to estates or trusts.⁴

What to Gather Before You Start

Form 741 is built on top of the federal return, so most of what you need is the paperwork you already prepared for the IRS. Pull together:

A complete copy of the filed federal Form 1041. You will enclose it with the Kentucky return, and most lines on Form 741 begin with figures from the 1041.⁵
The federal employer identification number (FEIN) for the estate or trust.
Income records: interest, dividends, business and farm income, rents, and capital gains from any assets sold during the year.
Deduction records for administrative expenses, fiduciary fees, and attorney costs. If you deduct administration expenses on Form 741, you must file a statement waiving the right to deduct the same expenses on the Kentucky inheritance tax return.²
Beneficiary names, addresses, and Social Security numbers for anyone who received or was entitled to a distribution.
A copy of any W-2 for wages the decedent earned before death.

The fill-in form is on the Department of Revenue’s fiduciary tax page.⁶

Working Through the Form

Line 1 begins with federal adjusted total income from federal Form 1041, line 17. From there, the form reconciles Kentucky treatment to federal:

Line 2 adds income Kentucky taxes but the federal return excluded. Line 3 subtracts deductions tied to that additional income.
Line 6 subtracts income Kentucky exempts that was included federally. Line 7 adds back deductions tied to that exempt income.²
Line 10 is the income distribution deduction, the portion of income distributed or distributable to beneficiaries. This is what shifts the tax from the entity to the individual beneficiaries.
Line 11 is the pension income exclusion of up to $31,110, which requires Schedule P if the estate or trust received qualifying retirement income.
Line 12 is the federal estate tax deduction for income accrued at the date of death, with a supporting computation attached.

After these adjustments, Kentucky taxable income lands on line 16. Multiply by 3.5 percent for 2026 to get the tax on line 17(a). If the estate or trust received a lump-sum distribution, the tax from Form 4972-K goes on line 17(b). Credits for taxes paid to other states, the limited liability entity tax credit, and withholding reduce the balance on the lines that follow.

For a nonresident estate or trust, the mechanics are the same but the income reported is limited to Kentucky sources. Line 15 subtracts intangible income attributable to nonresident beneficiaries that was not already removed through the line 10 distribution deduction. Enclose the federal Schedules K-1, or a separate schedule listing each beneficiary’s name, address, Social Security number, and share.² Deductions already claimed on the Kentucky inheritance tax return or on the decedent’s individual return cannot be claimed again here.

Schedule K-1 for Each Beneficiary

Any time you claim an income distribution deduction on Schedule B, you must prepare a Kentucky Schedule K-1 for each beneficiary. File each K-1 with Form 741, give a copy to the beneficiary, and keep one for your records.⁵

The Kentucky K-1 has three columns. Column (b) carries amounts from the federal Form 1041 Schedule K-1. Column (c) captures any federal-to-Kentucky difference using Schedule M. Column (d) is the final Kentucky figure the beneficiary will use on Form 740 (resident) or Form 740-NP (nonresident). Nonresident beneficiaries are taxed only on Kentucky-source income flowing through.

If a distribution includes net income from a limited liability entity subject to tax under KRS 141.0401(2), complete line 12(a) of the K-1 for the pass-through credit. Line 12(b) reports Kentucky income tax withheld on Form PTE-WH or a pass-through entity tax credit from Form PTET-CR.⁷

Deadline and Extensions

Form 741 is due by the 15th day of the fourth month after the close of the tax year. For calendar-year filers, that is April 15.⁵ Fiscal-year filers count four months from their year-end.

If you filed a federal extension, you do not need a separate Kentucky extension. Attach the federal automatic extension form to the Kentucky return when you file. The exception: if you owe tax, file Form 740EXT and pay the estimated balance by the original due date. An extension buys time to file, not time to pay.⁸

Where to File

Mail the completed Form 741 and all attachments to:

Kentucky Department of Revenue
Frankfort, KY 40620-0016²

Kentucky uses the same address whether or not you include a payment. Make checks or money orders payable to the Kentucky State Treasurer. Electronic filing is available through approved software listed on the Department of Revenue’s fiduciary tax page.⁶ Paper returns take roughly eight to twelve weeks to process.⁹

Estimated Payments During the Year

If the estate or trust expects to owe more than $500 in Kentucky tax after withholding and credits, the fiduciary may need to make quarterly estimated payments. Skipping them can trigger an underpayment penalty calculated on Form 2210-K.⁵ For a first-year estate or trust with no prior return to use as a safe harbor, project the current year as accurately as you can and pay in at least 90 percent of what you expect to owe.

If You File Late or Pay Late

A late return carries a penalty of 2 percent of the total tax due for each 30 days (or fraction of 30 days) past the due date, capped at 20 percent. The minimum penalty is $10, and it rises to $100 if the return comes in late after a jeopardy assessment.¹⁰

Interest runs separately. For calendar year 2026, Kentucky charges 9 percent on overdue tax, from the original due date until the balance is paid, with no process to protest or waive it.¹⁰

The Department of Revenue cross-checks Form 741 against the federal return and against what beneficiaries report on their individual returns. Reconciling the K-1 figures before you file is the simplest way to avoid follow-up inquiries.

1
Kentucky Legislative Research Commission. 25RS HB 1
2
Kentucky Department of Revenue. Instructions – Form 741 Kentucky Fiduciary Income Tax Return
3
Justia. Kentucky Code 141.030 – Levy of Income Tax on Estates, Trusts and Fiduciaries – Liability of Fiduciaries
4
Kentucky Legislative Research Commission. 103 KAR 19:010 – Computation of Income; Estates and Trusts
5
Kentucky Department of Revenue. Instructions – Form 741 Kentucky Fiduciary Income Tax Return
6
Kentucky Department of Revenue. Fiduciary Tax
7
Kentucky Department of Revenue. Form 741 Kentucky Fiduciary Income Tax Return – Schedule K-1
8
Kentucky Department of Revenue. 740EXT
9
Kentucky Department of Revenue. Where’s My Refund
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Kentucky Department of Revenue. Penalties, Interest and Fees