In order to administer an estate of deceased, you will first need a tax ID number. A tax ID number for an estate operates like an SSN for an individual: It makes it possible for tax services and banks to identify the entity. Without a tax ID number, there isn’t a lot you can do to manage an estate. Here’s everything you need to know about the differences between trusts vs estates and how to obtain a tax ID for your estate.
Step-by-step information on Tax ID (EIN) Numbers and estates
- Do you need a tax ID number for an estate of deceased?
- What information do I need to apply for an estate tax ID number?
- How do I obtain a tax ID number for an estate online?
- How do I obtain a tax ID number for an estate via mail or fax?
- How long does it take to get a tax ID number for an estate?
- Does an estate of deceased need a tax ID number?
When managing an estate of deceased, getting a tax ID number is one of the first things you should do. An estate of deceased becomes a separate entity from the deceased after their passing, which means a tax ID number is needed to open bank accounts, make payments, and complete official documentation.
Managing an estate of deceased is impossible without a tax ID number because there would be no way to open and access new bank accounts and pay the estate’s existing debts. For logistical reasons, it’s important that everything goes through the estate: If a trustee attempts to pay off debts on their own seeking reimbursement later, the situation is likely to become complex.
Additionally, an estate is going to need to file a tax return just as the deceased would (and the deceased will also need to file a final tax return). Without an estate tax ID number, this isn’t possible.
In order to apply for an estate tax ID number, you’ll need:
- Your own personal information, as the administrator of the estate. This includes your mailing address, legal name, and either SSN or ITIN.
- The information of the deceased individual, including their legal name, and SSN or ITIN.
- The date that the estate was formed (or the date of the individual’s passing).
This information will be used to link the estate tax ID number with the deceased individual’s estate.
Online is the easiest way to get an estate tax ID. Usually, the need for an estate tax ID is fairly urgent. When administering an estate, you need to be able to pay the estate’s bills. And, just like any other bills, these bills can lead to late fees or delinquencies if left unpaid. A common issue is having to maintain the mortgage of the deceased’s house until the house can be sold or inherited.
Applying online for a tax ID number is a simple process. Just go through an online tax ID service, fill out a form, and you can receive your estate tax ID number through email within an hour. Your estate tax ID number can be used immediately after being received, which means you can take it directly down to a bank or an accountant to complete your estate documentation.
While there are other ways to receive an estate tax ID (via mail or via fax), both of these options are less recommended. They take longer and they are less reliable.
There are some reasons why you might want to get a tax ID number via mail or via fax. If you want paper documentation of the tax ID number, for instance, you may not want to receive it online. For most people, online filing will be the better option.
To acquire a tax ID number through the mail, you will fill out the tax ID form and send it into an estate tax ID service. This will be mailed for processing. Processing an estate tax ID number via mail will take up to six weeks depending on how busy the tax service is. Once the information has been processed, you will receive your tax ID number via mail to your mailing address.
To acquire a tax ID number through fax, you will fill out the same tax ID form, but instead it will be faxed in during business hours. It will take three to four business days for processing, and the tax ID number will be faxed back. This can occasionally lead to some complications, as faxes may be returned or may cause errors.
How long it takes to receive a tax ID number depends on the method used to apply for it. If you applied online, you should receive your tax ID number within an hour. If you applied via fax, you should receive it within four business days. Finally, if you applied via mail, you should receive it within four weeks during the slow season, or within six weeks during busier seasons.
If there are any errors on your application, you will receive a request for correction and you will need to reapply. One of the major benefits of working with a tax ID service is that they can help you avoid any mistakes that would lengthen the application process. Reapplications have to be started from scratch, so they reset the clock on receiving your tax ID number.
An estate of deceased does need a tax ID number for many things: filing taxes, opening bank accounts, paying off creditors, cutting checks and more. Without a tax ID or federal EIN number, the estate of deceased is unable to function and maintain itself. Luckily, getting a tax ID number is a fairly trivial process: If you apply for a tax ID number online, you can usually receive it within the hour.
Applying for a tax ID number for an estate should be done immediately upon starting to administer the estate, as a significant amount of the paperwork involved is going to request the tax ID number. A tax ID service can help you through the process and make sure you have everything you need to properly administer the estate.