If you have a trust that earns income, it may need an employer identification number (EIN). An EIN is a federal tax ID number that a trust, estate, or business must use to file federal and state income taxes. Not all types of trusts require an EIN. Revocable trusts generally don’t need EINs because their income is included on the tax return of the trust creator, who’s known as the grantor or trustor. Irrevocable trusts always need an EIN if they contain assets that produce income.
Key takeaways
An EIN is a tax identification number that allows a trust to file its own tax return
Revocable trusts generally don’t need an EIN if the grantor is still alive
Irrevocable trusts that produce income need an EIN
Get a free EIN from the IRS through its online application or by completing and mailing IRS Form SS-4
Does a revocable trust need an EIN?
If you have a revocable trust and the grantor is still alive, then you don’t need an EIN for the trust. Income from a revocable trust is taxed as income for the grantor and is included on the grantor’s tax return. The trust’s tax ID number is just the grantor’s Social Security number (SSN). This is true even if the grantor is not the trustee. Once the grantor of a revocable trust dies, the trust becomes irrevocable and will most likely require an EIN.
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Since trusts can go by many names: A grantor trust, revocable living trust, or inter vivos trust (if set up as revocable) does not need an EIN because it doesn’t have to file its own income tax return.
Does an irrevocable trust need an EIN?
An irrevocable trust needs an EIN if it produces income. Any irrevocable trust is a separate legal entity from its creator for tax purposes, so it must have a separate tax ID and file its own tax return. This applies to all types of irrevocable trusts, including testamentary trusts, Medicaid trusts, special needs trusts, and charitable trusts. A grantor with multiple irrevocable trusts has to get a separate EIN for each trust. If the grantor of a revocable trust dies, that trust may become irrevocable and will require an EIN to pay taxes on its income.
If someone creates an irrevocable trust but doesn’t place any income-producing assets into the trust, like if the only thing in the trust is a house, it’s possible an EIN won’t be necessary since a tax return won’t be necessary. For more help with a specific situation, talk to your financial advisor or lawyer.
Related: Should I put my house in a trust?
Does a trust need an EIN if the trustee changes?
No, you don’t need to get an EIN or change a trust’s EIN just because of a trustee change. This is true even if you add a trustee, remove a trustee, if a successor trustee takes over for a grantor trustee, or if a current trustee’s personal information changes (like if they get married and change their name).
Does a trust need an EIN if the trustor changes?
Updating the personal information of a trustor (grantor) doesn’t require getting an EIN. However, your situation may be different if you’re making changes because the grantor of a revocable trust has died.
Does a trust need an EIN if a beneficiary changes?
No, an EIN isn’t necessary just because of changes to trust beneficiaries.
How to get an EIN for a trust
There are two ways to apply for an EIN, and both are free as long as you go directly through the IRS:
Apply for an EIN online through the IRS’ EIN application.
Submit a paper EIN application by completing Form SS-4 and mailing or faxing it to the IRS. (You will have to pay for postage if mailing your application.)
The EIN application will ask for the trust’s name and the trustee’s name, address, and Social Security number (or their ITIN if they don’t have an SSN). For questions about the “responsible party,” use the trustee’s information. You will also have to specify what type of entity you’re creating (a trust), why you’re requesting an EIN (because you’re creating a trust), and what type of trust you’re creating (probably irrevocable). The application asks a handful of other questions, like when the trust was funded and whether the trust has employees.
If you use the online EIN application, you can immediately receive your EIN, but the application must be completed all at once and it’s only available Monday to Friday, 7 a.m. to 10 p.m. Eastern Standard Time.
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With experience in financial planning and tax implications, I'm well-versed in the realm of trusts and their tax obligations. The article you provided dives into the nuances of trusts and their need for an Employer Identification Number (EIN), a crucial component for tax filing. Let's break down the concepts covered:
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Employer Identification Number (EIN): This is a federal tax ID used by trusts, estates, and businesses to file federal and state income taxes. It's essential for trusts that generate income.
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Revocable Trusts and EIN: Revocable trusts, while they don’t require an EIN as long as the grantor is alive, transition to needing an EIN upon the grantor’s demise. The grantor's Social Security number serves as the trust's tax ID until then.
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Irrevocable Trusts and EIN: Irrevocable trusts, regardless of their type (testamentary, Medicaid, special needs, charitable), require an EIN if they produce income. They are separate entities for tax purposes and file their own tax returns.
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Trustee and EIN: Changes in trustees don’t necessitate an EIN alteration. The EIN remains the same even if trustees change, whether adding, removing, or replacing them.
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Trustor (Grantor) and EIN: Updating personal information about the trustor doesn't demand an EIN change unless it involves transitioning from a revocable to an irrevocable trust due to the trustor's death.
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Beneficiary Changes and EIN: Alterations in beneficiaries don’t prompt the need for a new EIN.
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Getting an EIN: You can obtain an EIN for a trust through the IRS online application or by submitting Form SS-4 via mail or fax. The application requires information about the trust, the trustee, and specifies the type of entity (trust) and its purpose.
Understanding these points ensures compliance with tax regulations when managing trusts. It's crucial to differentiate between revocable and irrevocable trusts regarding their EIN requirements based on income generation and changes in trustee or trustor positions.
