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A development director mentions, almost as an aside, that the organization has been paying premiums on a donor-funded life insurance policy. That single sentence is where Form 8870 begins, and where a clean engagement turns complicated. The form is the information return a section 170(c) charity or section 664(d) charitable remainder trust files when it paid premiums after February 8, 1999 on a personal benefit contract, meaning any life insurance, annuity, or endowment contract that benefits the transferor or someone they designate.
The trap people fall into is treating it like routine reporting. If the premiums were paid in connection with a transfer that does not qualify for a deduction under section 170(f)(10), an excise tax equal to the premiums applies on Form 4720. Calendar-year deadlines also split: May 15, 2026 for non-CRT charities and April 15, 2026 for CRTs, with Form 8868 available to extend.
Key Takeaways
- Form 8870 reports premiums paid on personal benefit contracts tied to transfers to a charity or to a charitable remainder trust. Covered contracts include life insurance, annuity, and endowment contracts that benefit the transferor or a person they designate.
- Who files, organizations described in section 170(c) and CRTs described in section 664(d) when premiums were paid after February 8, 1999.
- Deadlines, charities file by the 15th day of the fifth month after year end, for calendar‑year organizations that is May 15, CRTs file by April 15. You can extend using Form 8868.
- If premiums were paid in connection with a transfer that does not qualify for a deduction under section 170(f)(10), an excise tax equal to the premiums applies on Form 4720, and the organization that owes that tax should also be filing Form 8870.
- Do not confuse Form 8870 with employer‑owned life insurance reporting, which uses Form 8925 and has different rules and timing.
What Form 8870 Covers and Why It Exists
Form 8870 exists to make sure the IRS sees insurance‑type arrangements where a donor funds a charity or a CRT and premiums are paid on a policy that benefits the donor, a family member, or another person the donor names, rather than benefiting the charity. These are called personal benefit contracts. When premiums are paid after February 8, 1999, the charity or CRT reports the premiums and related details on Form 8870. The goal is simple, shine light on arrangements that can look charitable on the surface but send value back to the donor.
In practice, this shows up when a donor transfers cash or property to a charity and there is an understanding that the charity, or someone else, will pay premiums on a policy that benefits the donor or their designee. The IRS also links these disclosures to excise tax reporting on Form 4720 when the transfer is not deductible under section 170(f)(10). That cross‑reference lives right in the 990 instructions and the 4720 instructions.
A quick mental model, if the policy’s economic benefit circles back to the donor or their pick, expect Form 8870, and check whether Form 4720 Line 8 applies too.
Who Must File and the Triggers That Matter
You must file Form 8870 if you are either of the following and premiums were paid after February 8, 1999, on a personal benefit contract tied to a transfer to you.
- A charitable organization described in section 170(c).
- A charitable remainder trust described in section 664(d).
Form 8870 focuses on premiums, not on generic noncash gifts or donor‑advised fund distributions. Several drafts floating around the internet mix these topics. Keep it clean. If you are dealing with donor‑advised funds, your reporting lives on Form 990 with Schedule D details. Form 8870 is not the DAF form.
Typical fact patterns that trigger Form 8870
- A donor gives appreciated stock to your charity, and you, or another party by agreement, pay premiums on a policy that names the donor’s child as beneficiary.
- A CRT is funded and pays premiums on a contract that benefits someone the transferor designates, not the charity.
- Someone else is expected to pay premiums, and those payments are treated as paid by your organization in connection with the transfer. Your 990 and 4720 instructions point you to report and pay excise tax in that case, which is the red flag that 8870 belongs in the packet.
Due Dates and Extensions
- For charities, file Form 8870 by the 15th day of the fifth month after your tax year ends. For a calendar‑year filer, that is May 15, 2026 for tax year 2025.
- For CRTs, file by April 15 following the close of the trust’s year.
- You can request an extension for Form 8870 using Form 8868 (not Form 7004, which does not apply to exempt-organization information returns). Plan for up to 90 days on the first request, with a second Form 8868 available for another 90 days if needed, capped at 6 months total for any domestic organization – Form 8868 is not a single automatic 6-month grant for Form 8870. The IRS notes that the 8870 extension request must be sent on paper to the Ogden address listed in the instructions.
Practical tip, align your 8870 workflow with your 990, 990‑PF, or 5227 preparation so you do not chase signatures twice. The IRS ties these filings together in their guidance for exempt organizations.
8870 vs 8925, and How to Avoid the Common Mix‑up
A frequent mistake is to use the employer‑owned life insurance rules when you really have a personal benefit contract, or the reverse. Here is the clean split.
- Form 8870, used by charities and CRTs to report premiums on personal benefit contracts tied to transfers to the organization, generally when the contract benefits the transferor or a designee.
- Form 8925, used by employers to report how many employees are covered by employer‑owned life insurance issued after August 17, 2006, the total insurance in force, and whether consents were obtained. The reporting is attached to the employer’s income tax return, with timing under section 6039I.
Quick comparison table
| Item | Form 8870 | Form 8925 |
| Who files | Charity under 170(c) or CRT under 664(d) | Employer that owns life insurance on employees |
| What is reported | Premiums on personal benefit contracts tied to a transfer | Headcount covered, total insurance in force, employee consents |
| Core law hook | Section 170(f)(10), personal benefit contracts | Sections 101(j) and 6039I |
| Due date | Org, 15th day of 5th month, CRTs, April 15, extension with 8868 | Attached to the policyholder’s income tax return due date |
| Related tax form | Form 4720 Line 8 may apply if transfer is nondeductible | None by default, but 101(j) can impact income exclusions |
| Typical confusion | Mistakenly treating employer‑owned policies as 8870 items | Thinking a donor’s personal policy is an employer‑owned contract |
Sources, IRS 8870 and 8925 pages, and the 6039I regulation.
Step‑by‑Step Filing Workflow
I use a three‑part checklist in practice. It keeps the narrative straight for reviewers and it speeds up sign‑off.
1) Confirm you have a personal benefit contract
- Identify transfers to the organization or to a CRT for the year.
- Ask whether premiums were paid on any life insurance, annuity, or endowment contract connected to those transfers.
- Confirm who benefits from the contract. If the benefit points to the transferor or their designee, you are in personal benefit contract territory.
- Cross‑check your 990 or 990‑PF preparation notes, the instructions tell you to report these arrangements and, if nondeductible, to calculate excise tax on Form 4720.
2) Gather the right data
- Transferor name, address, and identifying number.
- Beneficiary or designee information.
- Contract type and issuer, policy number, and premium dates and amounts.
- A short memo explaining the understanding around who pays premiums.
- Any related board minutes, acknowledgments, or correspondence.
3) Prepare filings and tie them together
- Complete Form 8870 with the premium details.
- If the transfer falls under section 170(f)(10)(A) and is not deductible, compute the excise tax equal to the premiums on Form 4720 Line 8. The 4720 instructions even include a tip that, if you have an entry there, you must also file Form 8870. That tip is your safety check.
- Attach 8870 and file by the due date noted earlier on paper to the IRS in Ogden, UT (Form 8870 is not part of the 990-series modernized e-file system – it has no e-file route in the current instructions), and file 4720 if the excise tax applies. Keep copies with your 990, 990‑PF, or 5227 package for a clean paper trail.
Documentation, Retention, and Controls
Your records should make it obvious what happened, why it happened, and who benefits. I recommend a six to seven year retention horizon for these files as a practical policy. That often covers multiple statutes of limitation and board cycles. Treat this as a best practice, not as a special 8870 rule (the Form 8870 instructions actually require keeping records as long as their contents may become material in administering any Internal Revenue law, which can run longer than a fixed 7-year window – use whichever is longer). Keep source proofs, including premium confirmations from the carrier, donor correspondence, and any internal approvals that show the organization understood the arrangement.
Treat Form 8870 documentation as audit‑ready, names, dates, amounts, and a sentence or two that explains the benefit path.
For calendar control, add 8870 and any 4720 tax to the same task chain as your 990 or 5227. The IRS groups these returns in the exempt organization tool set, which makes it natural for your compliance calendar.
Errors I See Most Often, and How You Can Avoid Them
- Confusing 8870 with 8925. Fix, decide whether the filer is a charity or an employer, then pick the form.
- Missing the 4720 tax. Fix, check Form 4720 Line 8 any time you complete 8870 or see premiums connected to a nondeductible transfer. The instructions even tell you that 8870 belongs with that entry.
- Wrong due date or missed extension. Fix, mark May 15 for calendar‑year charities, April 15 for CRTs, and use Form 8868 if you need more time. The IRS calls out the paper submission nuance for 8870 extensions.
Examples You Can Model
Example 1, Charity with a donor‑benefit policy
A donor contributes cash and there is an understanding that premiums will be paid on a policy naming the donor’s sibling as beneficiary. Your charity pays the premium. You complete Form 8870 to disclose the premiums. If the transfer is nondeductible under section 170(f)(10), you also compute an excise tax on Form 4720 equal to the premiums paid. Your 990 narrative references the 8870 and 4720 filings for clarity.
Example 2, CRT paying premiums
A CRT formed under section 664(d) is funded and pays premiums on a contract that benefits the grantor’s child. The trustee files Form 8870 by April 15 and includes the premium detail. If applicable, the trustee addresses Form 4720. The CRT also files Form 5227, and it maintains a copy of the 8870 with the trust’s annual file.
Example 3, When it is not Form 8870
Your company owns policies on several employees and tracks consents. This is employer‑owned life insurance reporting, not a charity filing. Attach Form 8925 to the employer’s income tax return by its due date, and follow section 6039I’s rules.
Controls, Checklists, and Review Protection
If you run a nonprofit finance team or a trust administration desk, you already know the hard part is not the form. It is the handoffs. I recommend a short control set.
- Intake checklist for any transfer accompanied by an insurance arrangement.
- A one‑page memo that answers, who benefits, who pays premiums, what is the timing.
- A ledger tag in your close checklist that forces an 8870, 4720, and 990 cross‑check.
- A second reviewer who confirms the due date, extension status, and attachments.
This is where a disciplined delivery model pays off. If your internal capacity is thin during peak season, a structured offshore team can help collect documents, validate premium proofs, and build audit‑ready workpapers inside your 990 or 5227 workflow. Accountably focuses on that kind of repeatable, review‑friendly delivery, with SOPs, layered review, and standard naming so partners do not get trapped in rework. Use a partner only if it protects your quality and reduces review time, not as a quick staffing patch.
Common Mistakes We See Every Season
Form 8870 errors usually trace back to confusing it with cousins on the exempt-organization shelf – the 990 series, Form 5227, and Form 4720 – or to skipping line items the October 2021 instructions treat as mandatory.
Reusable Checklists
Drop these into your firm SOP for any nonprofit, private foundation, or charitable remainder trust engagement that touches personal benefit contracts.
Pre-file scoping for personal benefit contracts
- Confirm the entity is a section 170(c) charity, a section 4947(a)(1) nonexempt charitable trust, or a section 664(d) CRT.
- Inventory every life insurance, annuity, or endowment contract held by or for the entity during the tax year.
- For each contract, identify the transferor and every direct or indirect beneficiary (transferor's family, designees, other persons named by the transferor).
- Confirm whether premiums were paid after February 8, 1999 in the current tax year by the entity or by anyone under an understanding or expectation.
- Pull the policy number, contract issuer name and address, beneficiary SSN or EIN, and transfer dates for Parts A, C, and D.
- Test the section 170(f)(10)(D) gift annuity exception and the section 170(f)(10)(E) CRT exception against actual incidents of ownership and payment entitlement.
- Determine whether Form 990, 990-EZ, 990-PF, or 5227 is the matching annual return for this entity – Form 8870 is in addition to it, not a substitute.
Part A through D data assembly
- Assign each contract a consecutive item number in Part A and reuse the same numbering in Parts B, C, and D.
- For Part B, enter the date and amount paid by the organization in columns (b) and (c) and the date and amount paid by others in columns (d) and (e).
- Sum columns (c) and (e) into column (f) for each contract; enter '0' rather than leaving any cell blank.
- If more than five contracts exist, use the Continuation Schedule on page 3 and complete line (g) on only one master schedule.
- Carry the master Continuation Schedule line (g) to Part B page 1 line (h), then add lines (g) and (h) into line (i).
- Carry Part B line (i) to Form 4720, Part I, line 8 for the section 170(f)(10)(F)(i) excise tax computation.
- Confirm the accounting period in the heading matches the period reported on the underlying Form 990, 990-EZ, 990-PF, or 5227.
Form 8868 extension and Ogden mailing
- Calendar the original due date: May 15 for non-CRT section 170(c) charities; April 15 for section 664(d) CRTs.
- If more time is needed, file Form 8868 on or before the original due date – Form 7004 does not extend Form 8870.
- Track 8868 grants: first extension up to 90 days, second 8868 up to another 90 days, total capped at six months for domestic organizations.
- Mail the return on paper to Department of the Treasury, Internal Revenue Service, Ogden, UT 84201-0027 – there is no e-file route in the October 2021 instructions.
- If using a private carrier, confirm it is on the IRS-designated PDS list at www.irs.gov/PDS before relying on the timely-mailing rule.
- If the return is late, attach a reasonable-cause statement explaining the delay – the instructions require it.
- For amended returns, mark 'Amended Return' at the top and resubmit the full return, not just the corrected lines.
Keep 8870 Season From Stalling
Form 8870 is a deceptively small return that breaks delivery in two places. First, the deadlines split – section 170(c) charities file by the 15th day of the 5th month after year-end (May 15, 2026 for calendar-year 2025 filers), while section 664(d) charitable remainder trusts file by April 15, 2026 (per IRS Form 8870 instructions, October 2021 revision). Second, Part B pulls premium data from four places that rarely share a naming convention: the donor file, the carrier's premium statement, the matching Form 990 or 5227, and the organization's own bank ledger.
The fix is workflow discipline ahead of season, not a scramble after the May 15 reminder fires.
- Map every personal benefit contract to a consecutive item number in Part A and reuse the same numbering in Parts B, C, and D – the October 2021 instructions require consistent numbering across all four parts.
- Capture Part B column (d) and (e) third-party premium payments the day they hit, not at year-end – the understanding-or-expectation rule sweeps them into the charity's reporting and excise-tax footprint.
- Pre-file Form 8868 for any engagement likely to push past May 15 or April 15; the first extension grants up to 90 days and a second 8868 adds another 90, capped at six months for domestic organizations.
- Pair every Form 8870 with the matching Form 990, 990-EZ, 990-PF, or 5227 in the workpaper index, plus Form 4720 for the section 170(f)(10)(F)(i) excise tax equal to 100% of premiums.
- Senior-review the line (g), (h), (i) chain at the bottom of Part B before sign-off – the line (i) total feeds Form 4720, Part I, line 8 and a mismatch is the cleanest IRS notice trigger on this return.
Accountably packages Form 8870, Form 4720, and the underlying Form 990 or 5227 inside a single structured workflow with documented SOPs, multi-layer review, and turnaround SLAs. See tax outsourcing services for how the engagement model maps to nonprofit and CRT season.
FAQs
Who must file Form 8870?
Any charity described in section 170(c) or any CRT under section 664(d) that had premiums paid after February 8, 1999 on a personal benefit contract tied to a transfer must file. If you see a policy that benefits the transferor or someone they name, assume Form 8870 is in scope.
When is Form 8870 due?
For charities, it is due on the 15th day of the fifth month after year end. For CRTs, it is due April 15. Use Form 8868 if you need more time, and note the IRS directs 8870 extension requests to be mailed on paper to the Ogden address in the instructions.
What is a personal benefit contract?
It is generally a life insurance, annuity, or endowment contract where the benefit flows to the transferor, a family member, or another person they designate, rather than to the charity. These arrangements can make a transfer nondeductible and can trigger an excise tax equal to the premiums on Form 4720.
How is Form 8870 different from Form 8925?
Form 8870 is for charities and CRTs reporting premiums on personal benefit contracts. Form 8925 is for employers reporting details on employer‑owned life insurance issued after August 17, 2006, and it attaches to the employer’s income tax return. Different filers, different laws, different timing.
Where does Form 4720 fit?
If a transfer tied to a personal benefit contract is nondeductible, you calculate an excise tax equal to the premiums on Form 4720 Line 8, and the instructions remind you to also file Form 8870. This is a common pairing.
Can we extend Form 8870?
Yes. Use Form 8868. The IRS guidance notes that the 8870 extension request must be mailed on paper to the Ogden address. Time your request for the original due date.