When a person dies, the executor, also known as the personal representative, must open an estate in the decedent’s name. The estate requires a tax ID number, but it can’t use the Social Security number of the late person for this purpose. Fortunately, obtaining an ID number from the IRS is relatively simple.
Tax Identification Number
As the IRS points out, a person and their estate are two separate taxable entities. The tax ID number of an estate is known as an employer identification number, or EIN. The executor may apply for this nine-digit number once the probate court has issued letters testamentary formally naming the individual as the personal representative of the estate. If the decedent did not leave a will, the probate court will appoint an administrator for the estate.
The simplest way to apply for the ID number is online, but if the personal representative is not comfortable using the internet to provide this information, they may download Form SS-4, the Application for Employer Identification Number, and fill out it. You can then apply for the tax ID number either by mail or fax. If you apply for the EIN online, you will receive the number immediately after submission via email.
Only the personal representative or administrator may apply for a tax ID number. You must have the Social Security number of the decedent when applying, as well as providing your own Social Security number and your full name and address.
Owner’s Death and Business
The EIN is not only used for estate purposes. It is the number every business must have to operate. The EIN is also known as the federal tax ID number. If the decedent owned and operated a business at the time of death, and the estate continues to run this business, the personal representative must also obtain a new EIN for the operation. The EIN of the estate and the business are not the same. Using the new business EIN, the executor then pays business related taxes and reports income and wages.
Filing Income Tax Returns
The personal representative must file the last income tax return of the decedent. That return is filed using the decedent’s Social Security number. Most estates will not have to pay federal income taxes on the decedent’s assets, as the federal tax exemption on estates for 2018 is $11.18 million. However, if the estate earns income, such as interest or capital gains, the personal administrator will have to file an estate tax return and pay income taxes.
Items you will need
- Income tax return
- Proof of identity
- Proof of court of appointment
- A document that substantiates identity of the deceased might be a passport, birth certificate or anything else that contains the name, date of birth and citizenship country. The IRS will mail your original document back to you.