As you administer the estate of your loved one, you must obtain a tax ID number. Executors cannot simply use the social security number of the decedent in order to file taxes or open accounts on behalf of the estate. Instead, the estate must be treated as its own tax entity. Fortunately, there are many quick options for obtaining this ID number.
Four Reasons Estates Need Tax ID Numbers
Aside from the fact that law requires it, there are several practical reasons for obtaining a tax ID number on behalf of an estate. These reasons include the following:
- Filing estate income tax returns
- Filing estate tax returns
- Opening up a bank account for an estate
- Opening up investment accounts for an estate
Just like people, estates are required to report their income, expenses, and distributions to the IRS; the tax ID number is needed in order to do so. Similarly, assets of the estate must be kept separate. In order to open up the necessary accounts, a tax ID number is required.
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