Businesses are not the only kind of entity that need a federal Tax ID number. Churches, non-profits, and sole proprietorships also need them. Essentially, everything needs a Tax ID number to pay taxes or to show that it is exempt from paying them. This rule even applies to the estate of a deceased individual tax ID number. Tax ID number applications are available online for all kinds of entities, including estates.
Why Does an Estate Need a Tax ID Number?
An estate needs a Tax ID number so that it can file an income tax return. The Tax ID number for an estate is called an employer identification number (EIN). The IRS uses the term EIN for the Tax ID numbers of all non-human entities. Therefore, the estate must still have an EIN, even though it does not have employees. There are two main purposes for the estate having an EIN. First, it uses the EIN to transfer money from the estate to the deceased person’s heirs. Secondly, many estates earn income on invested sums of money or on real estate properties. The estate uses the EIN to report this income on its income tax return.
Where to Get a Tax ID Application?
The best place to get an EIN application for an estate is the IRS-EIN website. It is one of the fastest ways to get an EIN. You just fill out an online EIN application form and check “estate” for the entity type. The website will send you an email confirmation usually within an hour, informing you of the estate’s EIN. The IRS will send an official confirmation a few weeks later. You can also search online for EIN application forms.
Estates can involve complex legal issues, but getting an EIN for an estate is easy.