Apply For An Estate EIN Number
Are you an estate administrator or a surviving spouse? Are you dealing with an estate that earned income? Or is it likely to earn income in the upcoming year? Then, you need to apply for a tax identification number for the estate.
Luckily, it’s easier to apply for an EIN for an estate. It’s definitely easier than making a tabouli salad recipe. Ready to get started? Then, keep reading for a look at the process to obtain a tax ID for an estate.
Frequently Asked Questions
We hear a lot of the same questions about how to apply for an EIN for an estate. To help you out, we’ve put together some of the frequently asked questions we hear when we work with an estate administrator or anyone else handling an estate.
What Is an Estate?
An estate is the sum of everything someone owns and all of the debts they owe. While someone is alive, they personally own their assets, and they have personal liability for their debts. When they pass away, their estate owns their assets and has liability for their debts.
Are Estates Required To Obtain A Tax ID (EIN) Number?
Generally, an estate only needs to obtain a tax ID number if it has taxable income. If so, it needs to file Form 1041 (US Income Tax Return for Estates and Trusts). To file this form, the estate needs an EIN tax identification number.
For instance, if the estate owns a building that earns rental income, the estate has taxable income. As a result, it must file the estate income tax return, and to do so, it needs an EIN.
How Long Does It Take To Get A Tax ID Number For An Estate?
If you apply for an EIN for an estate online, you can usually get the number the same day or shortly thereafter. If you fax in a request for an EIN, you should expect to wait a week or two. If you use snail mail, the process can take six to eight weeks
Apply For An Employer Identification Number For Estates Online
The fastest way to get an EIN number for an estate is to apply online. With an online application, you must provide the same information as you do with a paper application, but you can do the process from the convenience of your home or office. You don’t have to find a fax machine or run to the post office. Here are the steps.
1. Decide If Your Estate Needs an EIN.
As indicated above, estates usually only need an EIN if they are going to file an estate income tax return. To do this, you use Form 1041.
This is different from filing an estate tax return. These are separate returns. An estate return is Form 706 (United States Estate (and Generation-Skipping Transfer) Tax Return). To file this form, you only need the Social Security Number of the decedent. You might have to include EINs from businesses, trusts, or assets that the decedent was involved with, but you will not need an estate EIN for this form.
Form 1041 is also different from the last tax return of a deceased person. If someone dies in the middle of a tax year, their surviving spouse or whoever takes care of their matters will usually just file a 1040 (Individual Income Tax Return) and note that the taxpayer died during the year.
2. Gather information about the estate.
Before you start the online application for your estate’s EIN, you should get all the details that you need. Being ready helps to ensure that the online application doesn’t time out. It also saves you time and frustration. Here is what you need:
- Name of the decedent
- Name of the responsible party — that’s the estate administrator
- Tax ID number (Social Security Number) of the responsible party
- Address of the estate — you can have the mail sent to the personal representative of the estate
- Social Security Number of the decedent
- Reason that you’re applying for an EIN
- If the estate has employees
- If you expect to pay less than $1,000 in payroll tax for your employees
These are all the basic details you will need to complete your application.
3. Fill Out the Online Application for Estate EIN
Now that you have everything you need,fill out the questions to the best of your ability. Sometimes, it might feel like there’s more than one answer. For instance, in the section about why you need an EIN, you may want to note banking purposes if you need to open an account to deposit the estate’s income. However, you may also want to choose “other” and then note that you need an EIN for Form 1041. Just choose the option that is closest to the reason you’re currently applying.
That’s it. Now you have all the details you need to apply. To be on the safe side, you should apply as soon as possible. Then, you will have the EIN when you’re ready to file your 1041 form.