Who Files Form 990-T for an IRA: Custodian, Owner, and Deadlines

Form 990-T for an IRA is filed by the custodian or trustee of the account, not by the IRA owner personally. The IRS treats an IRA as a tax-exempt trust, so when the account earns enough unrelated business income to trigger the filing, the trust itself is the taxpayer. The custodian obtains a separate Employer Identification Number for the IRA, files the return under that EIN, and pays any resulting tax directly out of the IRA’s assets. In practice, though, whether the custodian actually prepares the return depends heavily on what kind of custodian you have.

Why the Custodian Is the Legal Filer

The Form 990-T instructions are explicit that the trustee of the IRA trust bears the filing duty, and a custodian is treated as a trustee for this purpose.¹ The owner’s Social Security Number can’t be used on the return, because the return isn’t the owner’s. Each IRA account that has to file gets its own EIN, and if one person owns several IRAs that each cross the filing threshold, each one is a separate trust with its own EIN and its own Form 990-T.

The tax the return computes comes out of the IRA. It isn’t a distribution to the owner, and it doesn’t show up on a Form 1099-R. It simply reduces the account balance, in the same way an account-level management fee would.

When the Filing Is Actually Triggered

An IRA has to file Form 990-T for any year in which its gross unrelated business taxable income reaches $1,000 or more.¹ The threshold is gross, not net, so a return can be required even when a $1,000 statutory deduction wipes the tax down to zero.²

The two situations that most often produce UBTI inside an IRA are an interest in a partnership or MLP running an active business, which flows through on a Schedule K-1,³ and debt-financed investment income, typically from a self-directed IRA that bought real estate with a non-recourse mortgage.⁴ Ordinary portfolio income, dividends, interest, unleveraged rents, and gains on non-leveraged assets, doesn’t count. Most people holding stocks, bonds, and mutual funds inside an IRA will never see this return.

Who Prepares It in Practice

The legal answer and the practical answer diverge here, and it’s the part most owners get wrong.

Large brokerage custodians generally don’t allow the kinds of investments that produce UBTI in the first place, so the question rarely comes up. Self-directed IRA custodians are a different world. Some offer Form 990-T preparation as a paid add-on service. Others hand you a blank form and tell you to find a CPA. In that second scenario, the owner (or the owner’s tax professional) prepares the return, and the custodian reviews and signs it before submission.

So the filing responsibility technically stays with the custodian in every case, but the actual work of preparing the return often lands on the owner. This is the part that surprises people who chose alternative investments for diversification and didn’t realize they were also signing up for a tax filing obligation inside the account.

What the Owner Has to Do

Even where the custodian prepares the return, it can only work with what it’s given. The owner’s job is to make sure the numbers actually reach the custodian in time. That means:

Forwarding any Schedule K-1s from partnerships held in the IRA. These often arrive well after April 15, which is one reason extensions are common.
Providing income and expense records for any self-directed investment the custodian doesn’t otherwise track.
Flagging debt-financed property, including any non-recourse loan used to acquire or improve real estate.

Custodians can’t file what they don’t know about. If a K-1 sits in your mailbox and never gets forwarded, the IRA still has the filing obligation, and the penalties still come out of the IRA.

If the Custodian Refuses to Prepare the Return

The legal obligation doesn’t disappear when a custodian declines to prepare Form 990-T. You’ll need to hire a CPA or tax professional to prepare it, then coordinate with the custodian to sign and submit the return and remit the tax from the IRA. Preparation fees vary with complexity, but a straightforward return with one K-1 typically runs several hundred dollars through a CPA.

Before an IRA invests in anything likely to generate UBTI, it’s worth asking the custodian directly how it handles Form 990-T and what the fee structure looks like. That single question up front avoids most of the scrambling that happens in March and April.

Deadlines and Estimated Payments

For a calendar-year IRA, Form 990-T is due April 15.⁵ Filing Form 8868 before that date buys an automatic six-month extension to October 15, but only for the return itself; any tax owed is still due April 15, and the IRS charges interest and penalties on late payment even when the return is properly on extension.⁶ The return has to be filed electronically; there is no paper option.¹

If the IRA expects to owe $500 or more in UBTI tax for the year, it also has to make quarterly estimated payments, computed on Form 990-W and paid from the IRA under its EIN.⁷ This catches a lot of first-time filers, because the estimated payment obligation can start mid-year, before anyone has thought about filing anything.

Who Pays When Things Go Wrong

Late filing runs 5% of the unpaid tax per month, up to 25%, with a minimum penalty for returns more than 60 days late.¹ Late payment adds 0.5% per month, also capped at 25%, plus interest at 7% per year for the first quarter of 2026, compounded daily.⁸

All of it comes out of the IRA. The owner doesn’t write a personal check, but the account balance shrinks by every dollar of penalty and interest, which is functionally the same problem.

Two Boundaries Worth Knowing

Roth IRAs are not exempt from this. Because Roth distributions are tax-free, owners often assume UBTI doesn’t apply, but UBTI is a tax on the trust itself while the money is still inside the account. Roth IRAs under section 408A are listed in the Form 990-T instructions as trusts required to file when gross UBTI reaches $1,000, and the rules, rates, deadlines, and penalties are identical.¹

UBTI is also not a prohibited transaction. The two get confused, and the consequences are very different. UBTI is a tax the IRA pays on certain income while continuing to operate normally. A prohibited transaction under IRC 4975, such as selling property to your own IRA or using its assets personally, can disqualify the entire account, treating the whole balance as a distribution in the year of the violation. Generating UBTI through a legitimate arm’s-length investment isn’t a prohibited transaction, and paying UBTI does not put the IRA at risk of disqualification.

1
Internal Revenue Service. Instructions for Form 990-T (2025)
2
Office of the Law Revision Counsel. 26 USC 512 – Unrelated Business Taxable Income
3
Internal Revenue Service. IRA Partner Disclosure FAQ
4
Internal Revenue Service. Unrelated Business Income From Debt-Financed Property Under IRC Section 514
5
Internal Revenue Service. Return Due Dates for Exempt Organizations – Form 990-T (Trusts)
6
Internal Revenue Service. About Form 8868, Application for Extension of Time To File an Exempt Organization Return
7
Internal Revenue Service. Estimated Tax – Unrelated Business Income
8
Internal Revenue Service. Interest Rates Remain the Same for the First Quarter of 2026