When you create a trust, you create a separate entity that is intended to reduce taxes and control assets. Of course, creating a separate entity can also mean that you need a separate Tax ID number. Whether you’re trying to create a trust account for someone else or you’re managing an estate trust for someone who has passed, finding out more about the EIN process is critical. Here’s everything you should know.
Want to start your Trust Tax ID (EIN) Application?
Steps to Applying for Trust Tax ID (EIN) Number
- Collect the Information required for a Trust Tax ID (EIN
- Apply for a Trust Tax ID (EIN) Number Online
- Apply for a Trust Tax ID (EIN) Number via Mail or Fax
- Do I Need a Tax ID (EIN) Number for my Trust?
- How Long Does it Take to Obtain a Tax ID (EIN) Number for my Trust?
- Why Do I Need a Tax ID (EIN) Number for my Trust?
To apply for a trust tax ID for a trust, you need to first collect information regarding the trust and its grantor. This will include the grantor’s name, mailing address, Social Security number or ITIN, in addition to information about the trust itself. Acquiring an EIN number for a trust is similar to the process of acquiring an EIN number for a business: You will need to know how the trust is structured and when the trust began.
If you’re going to be the registered agent regarding this trust, you will need to furnish your own personal information, which includes your SSN or your ITIN.
A trust will often need a Tax ID number quickly, as an EIN number is used for tax purposes and bank-related documentation. To that end, you can apply for an EIN number online and receive one within an hour. The online application is not complicated, and you can complete the entire process through a tax ID service.
If you’ve taken over the trust of someone’s estate, it’s likely that there are going to be bills that you need to pay, in addition to taxes that have to be filed. Neither of these things can be accomplished until you have an EIN number because you’ll need an EIN number to create the trust bank account.
Once you’re ready to apply for your Trust Tax ID (EIN) Number you can submit your application online.
Online isn’t the only way to apply for a trust Tax ID number. If you’d prefer to send in a paper form, you can apply for a Tax ID number via mail or fax. This will be the same form that’s used during the online process; the process will just take a little longer.
Here are your options:
- Mail. You’ll fill out and sign a paper application and mail it in. An EIN number will be returned in four to six weeks. For many trusts, this may simply take too long, and if there are any issues with processing or if the paperwork is lost altogether, the process can take much longer. If an estate trust has mortgage payments to make, for instance, you’ll need your EIN number much sooner than this would allow.
- Fax. You will fill out the same paper application as for the mail, but you will fax it in through a fax machine instead. An EIN number will be returned to you within five business days. A faxed-in request has the general problem of reliability: Faxes are unreliable because they can be interrupted. You also need access to a fax machine, which people today seldom have.
Either way, you will still receive a valid EIN number. The primary differences between online, fax and mail applications are the speed and the convenience. In general, there’s no advantage to applying through fax or mail; the online application process is faster and more streamlined.
Does a Trust need a Tax ID (EIN)? Whether you strictly need a Tax ID (EIN) number depends on the type of trust that you have formed. If you have formed a living revocable trust (a trust for another person that you can take back), you will use your own Social Security number or ITIN for the trust. This is because you can revoke the trust and it can become your asset again.
If you have formed a living irrevocable trust (a trust that you cannot take back), then the trust will need a separate tax ID. This is because the trust will be a separate legal entity, and it is an entity that you no longer have any rights to.
If you are managing an estate trust that has been formed after the grantor has passed, the trust will need a separate tax ID as the grantor is no longer in possession of the trust. An estate trust is always going to need an EIN.
Thus, the simple answer is that most trusts are going to need a Tax ID number because this Tax ID number is going to be used to distinguish the trust from the original grantor of the trust.
Do you need your Tax ID number now? You can get a Tax ID number within just an hour if you apply for it online. As long as you have all the relevant information available, you can start using your tax ID immediately. If you apply for an EIN number through mail or fax, you may need to wait up to six weeks.
There are many ways to apply for a tax ID for a trust, but the online EIN application is going to be the fastest, most convenient method. With a tax ID service, you can get a tax ID in time to open bank accounts, make payments and complete important legal documents related to the trust.
One of the major advantages of a trust is that it is a separate entity. A trust can hold assets without them being taxed as income. For instance, income taxes occur only when a beneficiary has distributed the funds. But because a trust is a separate entity, it also needs a separate Tax ID (EIN) number. This ID number will be used so that the trust can open its own bank accounts and pay its own taxes.