When the formation of trust takes place, one of the first things you need to do is ensure you have a trust employer identification number. A Tax ID or federal tax identification number is something you simply have to have as a trust. When you go to file a trust tax return, put together any type of activity in the name of the trust, the identification number is necessary. The nine-digit identifier will allow you to do things such as open a bank account in the name of the trust perhaps hire a financial analysis expert to look at the health of the trust, etc. You need to understand what information you need and also how to complete the application to make it all happen, to obtain the number quickly.
Steps to Getting a Tax ID / EIN Number for your Trust
- Required Information for the Trust to Get a Federal Tax Identification Number
- Benefits of the Online Application Method
- Varying Trust Tax ID (EIN) Application Methods
- Time to Obtain the Trust Tax ID (EIN) Number
- Why the Trust Needs an EIN
What is the type of information you will require for the trust to get a Tax ID (EIN) number? As a trust, you are unique in that you are not a typical business, but will be held to those same standards by the Internal Revenue Service in regards to getting an employer identification number in the first place.
You need to start by gathering up basic information on the trust itself. Think of this as basic details like the name of the trust as well as the date that the trust came into formation. If there is a legal address for the trust, having that in documentation can help as well. You want to gather up these types of basic details so you have them available, if necessary.
The next piece of the puzzle is the naming of the responsible party for the trust. The Internal Revenue Service requires the naming of a responsible party so that they can deal with just one individual if there are questions or follow-up, rather than going to the trust, or organization, when its more of a standard business.
Muhc like when obtaining a Tax ID for an Estate, the Trust’s “responsible party” has to be an individual with a Social Security Number or Individual Taxpayer Identification Number. The person also has to include details such as his or her legal name, date of birth, as well as address. Have these details ready as they will be necessary to submit and get an employer identification number for the trust.
There are a lot of benefits to applying for a federal tax identification number for a trust using the online method. These benefits include:
- The ability to get assistance from a Tax ID service professional.
- The opportunity to complete the application completely electronically, with any device that can connect to the Internet.
- Instant processing by the Internal Revenue Service.
- If there is a need for any follow-up, you can hear back from the IRS right away to close the loop and avoid delays.
The online application method is not the only choice in town. You also can apply for an EIN using traditional mail or fax methods. Both of these can allow you to get assistance from a Tax ID service provider. You will need physical copies of the most up to date application forms as well.
WIth the mail method, you complete the form on paper, put together any supporting documentation necessary, and package it up in an envelope to send to the IRS.
The fax method is similar, with the only difference being you are relying on the fax machine for submission of the form rather than the postal service.
How long can you expect it to take to obtain your trust Tax ID (EIN) number? Depending on how you go through the application process at first, it is going to largely dictate just how long the trust will have to wait before you have the number in-hand.
The online processing or application method is going to be the fastest by far. When you are applying online, you can expect the application to be completed within about one hour. After that time, you can have the federal tax identification number in-hand.
The fax method will take longer as you can expect it to be around five business days. It may take longer than that depending on just how busy the Internal Revenue Service is. Once they get the fax, it has to go into a queue for them to manually process and generate the tax identification number for your business.
The mail or postal service method will take the longest by far as you can expect to wait at least one month before you have the number back. The mailing process takes the longest as the mail has to get to the IRS, it needs to be opened and processed, and then mailed back to you in a complete state.
You may be wondering exactly why a trust needs a federal tax identification number. You have to think about the trust the same way you think about any other type of business. With a trust, you may be opening up a business savings or checking account in the name of the business. You may also be needing to file a tax return in the name of the trust as well. To do all of these things, you need to be sure you have an employer identification number handy.
Trust is going to have to have a federal tax identification number. With the number in-hand you will be able to perform the normal business operations as a trust organization. All business types need a federal tax identification number. The Tax ID (EIN) is essential to open up any type of banking accounts, file tax returns in the name of the trust, etc. Go through the process and work with a Tax ID service provider to get a grasp of the requirements as well as how best you can go through the application process.