Most trusts need the tax ID (EIN) number for tax purposes, especially irrevocable trusts. The trusts that generate income will have federal or state tax responsibilities and can be included in the trust creator’s tax return, depending on the trust.
If you inherited a trust, created it, or are responsible for its operations, you may require an EIN and know when to obtain it from the IRS. The article covers everything about the EIN application, requirements, and other information for a trust.
Apply for a Trust Tax ID (EIN) Number
Trusts protect or conserve the property for the beneficiaries under the probate court’s rules and are created under state and federal laws. Generally, trust is created under a will during the time of a person’s death, or people create it during their lifetime.
The trusts with employees or income need an EIN for tax and other purposes. However, not all trusts need to obtain the tax ID EIN. So, when you apply for the EIN, it’s better to understand whether you need a tax ID number or not.
IRS issues the unique nine-digit EIN to businesses or legal entities in the following ways:
- Online: You can complete the application via the IRS online tool during weekdays between 7 AM to 10 PM, EIN Assistant, and get your tax ID in a day.
- Filed Form SS-4: You have two options for submitting the Form SS-4: fax it to 855-641-6935, or mail it to EIN Operation, Cincinnati, OH 45999.
Documents you need to prepare for the Trust Tax ID (EIN) number
If you have a trust and need a tax ID (EIN), you should prepare the following documents or information for applications:
- In this case, the “responsible party” is the trustee’s Social Security number, or ITIN.
- Reason for EIN
- Trust should be legally registered, and you should have the information
- Trust address
- Trust details, like its fund, employees, and others
What trusts need an EIN?
Trusts are revocable or irrevocable, where revocable trusts do not need an EIN for tax purposes; however, irrevocable trusts would need to obtain an EIN. To understand your EIN requirement, you can understand what these trusts are:
- Revocable trust:
- It is revocable and created when a person places his/her assets in the trust for their lifetime and can revoke it anytime. So, typically the grantor reports all its income of the trust on their individual tax return and uses SSN, or ITIN, so no need for EIN.
- You should get the EIN when your revocable trust becomes a part of an estate or testamentary trust (part of a will and exists when the person dies).
- Irrevocable Trust:
- It cannot be amended, revoked, or modified after its creation without the federal court’s involvement and beneficiary consent.
- The grantor or creator of the trust generally controls the trust and its income, and hence is subject to income tax, and needs the tax ID (EIN) number.
When are you required to apply for a new EIN for a trust?
If you have an EIN for a trust, but sometimes you will need a new EIN if the following situation arises:
- Your trust becomes an estate after the death of the grantor.
- When your living trust changes into a testamentary trust;
- The change from a revocable to an irreversible trust.
Exclusion:
- If the trustee changes, there is no need to apply for a new EIN
- If the beneficiary or grantor changes his address or name, the old EIN can be applied for the trust.
Important Note:
- If you have multiple trusts for multiple people, you would need an EIN for each trust to fulfill the tax responsibilities.
- You will only require one EIN for the trust and its tax purposes if you have a single trust with several beneficiaries.
How is the trust going to use its EIN?
If you have applied for the EIN online, you can get it in 24 hours; however, via fax and mail, it may take 4 days and 4 weeks, respectively. So, if you are applying, you should apply timely to use the EIN for the following purposes:
- Filing a paper tax return (for e-file, you have to wait for two weeks at least)
- Open a trust bank account to manage finances
- Get more people to work for your trust and handle their employment payroll taxes or retirement plan (if you create one)
- You can make tax deposits or pay it electronically after two weeks of receiving the EIN.
However, if you have applied late and did not have the EIN and need to file the tax return, you can mention “applied for” in the EIN section with your application details to file it on time.
The EIN for a trust is important, especially if it’s an irrevocable trust or has employees, so do check if you would need an EIN and apply for it immediately.
