IRS Tax ID (EIN) Application

Does a Charitable Remainder Annuity Trust need a Tax ID (EIN)?

Charitable Remainder Annuity Trusts do need a tax ID (employer identification number), and the reason why has to do with some of their major benefits. Understanding why some trusts have EINs and some doesn’t involves understanding how trust accounts work.

Trust accounts can be irrevocable or revocable. An irrevocable trust cannot be changed for the duration of the trust. A revocable trust can be. And this directly relates to whether an individual is “in charge” of the money they have put in the trust.

When a donor puts money into a CRAT, they no longer manage or have access to that money. This allows the CRAT to become a separate taxable entity and manage its own taxes, often to the benefit of the donor. This is how many charitable trusts operate. If the trust was revocable, then the donor would still be able to have financial control over the funds, and the donor would still be liable for the taxes on those assets.

Of course, the annuities paid out by a CRAT are still going to be taxable. But the income made by the CRAT will not be taxable to anyone but the CRAT itself.