The rules over when an estate needs a Tax ID Number (EIN) are often misunderstood. Many see an estate as something other than a business or company, but it is pretty similar. In more cases than not, a Tax ID (EIN) is something you will need for an estate of deceased. If you figure out you do need an employer identification number for the estate, though, you need to know the best way to go through the application process. This is where it becomes valuable to know how to go about applying for a Tax ID (EIN) online.
A really small estate will not need an employer identification number, but if the estate has a gross income of $600 or more, it will be a requirement. Before estate assets get distribution to beneficiaries or income earnings occur, a Tax ID (EIN) and a tax return need to be an expectation. The only time you will not need a Tax ID (EIN) for an estate is when you have no income earned by the estate, or an amount less than $600. Even if the estate holds a property that produces no income, but it intends to sell, the title company needs an EIN. So, in most cases, an EIN is a requirement.
Steps to Learning How to Obtain a Tax ID (EIN) Number for an Estate:
- 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?
You will, for the most part, need a Tax ID (EIN) for an estate of the deceased. As soon as the estate holds assets and begins to turn a profit, there is going to be a necessity for a tax return filing to happen on behalf of the estate. When the estate needs to a file a tax return, a Tax ID (EIN) is a requirement for that to happen. Without the employer identification number, you have no tax return you can file with the Internal Revenue Service.
The estate Tax ID (EIN) needs a filing very similar to what you would do as a corporation. it starts with the naming of the responsible party of the estate. The individual on the estate that has the ability to handle the assets, the control of the property, dissolution of everything, will be the responsible party.
You may have multiple parties with an interest in the estate, but there can only be one responsible party you list when applying for the Tax ID (EIN). The responsible party needs to be an individual or entity with its own unique identifier, such s a Social Security Number.
Once you have the information of the responsible party, their address and all that, as well as basic information on the estate, you have the ability to obtain the Tax ID (EIN) from the Internal Revenue Service. Gathering the information is a great first step before you even think about applying.
The easiest way to get a Tax ID (EIN) for the estate is to go through the online application process. You can apply for an employer identification number for an estate right online through the Internal Revenue Service’s site.
The online EIN application process takes the form required from the Internal Revenue Service and makes it virtual. With a laptop, desktop, even a tablet, you can apply by filling in the information on the responsible party and everything else that requires answering.
The great thing about the online application process is the quick answer you get. The Internal Revenue Service will validate the information you provide in a matter of minutes. Within a 10-minute span of going through the application process, submitting it all for validation, and getting a response, you could have your Tax ID (EIN) number.
You also have the ability to obtain a Tax ID (EIN) number via mail or fax. The EIN application process through mail or fax will take more time than the online process, but it is not all that complicated.
The mail application process will have you going through the form the Internal Revenue Service requires, called an SS-4. You will be filling out the form in full, via paper, and completing it before popping it into an envelope. Once you get the information on the application and into an envelope, you can mail it to the Internal Revenue Service. The IRS usually takes a few weeks between when they receive the form, do the validation, and send it back. Once they do, they will send you the Tax ID (EIN) number.
The fax process is similar to the mail application process as you will be completing the form via paper. You will then use the IRS fax number to submit it to them for validation. Once they do the validation, over the course of several days, they will send you back your complete Tax ID (EIN) number.
The length of time it takes to get a tax ID number for an estate will vary from one application process to another. If you apply via the online method, you could have your tax ID number in a matter of minutes. If you apply via mail, it could take a few weeks. The fax method is somewhere in the middle, but even that will take at minimum a few days.
The general rule of thumb is it is always best for an estate of deceased to get a Tax ID (EIN) number. Even if you are not sure it will be necessary, it is best to apply for one with an estate rather than finding out you need one later, when it is tax filing time. Do your due diligence now, register the estate with the IRS, and be ready.