Almost every kind of entity has a federal Tax ID number. For example, all U.S. citizens have social security numbers. Non-citizens who are eligible to work in the United States also have them. All kinds of businesses have Employer ID Numbers (EIN). Of course, the word “business” does not cover every type of entity that needs an EIN. Nonprofit organizations, churches, and estates all have EINs. What about trusts, though? Is there such a thing as a trust Tax ID number? If there is, then why does a trust need a Tax ID number?
What Is a Trust?
A trust, also called a living trust, is a fund set aside by a living person (the grantor) for his or her heirs. The heirs will inherit the money from the trust when the grantor dies, but the inheritance process is less complicated. People set up trusts to avoid the stressful and expensive legal issues related to estates. Unlike estates, trusts are not subject to probate.
Trusts and Taxes
From a tax perspective, a trust is considered just another asset belonging to the grantor. The IRS treats a living trust the same way it treats the grantor’s other bank accounts or real estate property. A trust does not need its own EIN. Some grantors get EINs for their living trusts, anyway. Even if the trust has an EIN, the grantor does not file a separate tax return for the trust.
How to Get a Tax ID for a Trust
If you want to get a Tax ID for a living trust, fill out an EIN application. It is very fast and simple to get one. You will have the EIN for your trust within a day of submitting the application.
In summary, Tax ID numbers for living trusts are optional.