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Do You Need Both a Federal and Estate Tax ID?


When you are starting a business, one of the first things you need to do is get a Federal tax id number. This allows you to file the applicable taxes that keep you in compliance with the federal government. There are some people, however, who have never started a business but are now thrown into the thralls of taxes and tax law because someone passed away and made them the executor of their estate. An onslaught of questions has the potential to arise. The primary thing you need to know is, just like a business, you must get an estate tax ID number.

Federal Laws

When you become the executor of an estate the IRS requires that you get a new Tax ID for estate. This is simply so you can conduct business on behalf of the deceased. There may be bills that need to be paid, debts that need to be taken care of and assets that need to be sold. You, as the executor, do not want to pay money on your personal taxes for something you inherited or were assigned to take care of. That is why the federal government stepped in and allows you to treat that executorship as a business for tax purposes.

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State Laws

Federal laws are easier to comply with because they are universal regardless of where you are in the nation. State tax laws are a little different, starting with not every state has an estate tax. Only a hand full of states actually requires estate executors to get a state EIN for filing purposes. Does your state require you to get an IRS-EIN-Tax-ID? That is why there are professionals who can easily find the answer to your question and even make sure your federal and state documentation is filed correctly.

Sean Jacobson

I'm Sean, a former HR and business consultant providing you insights into the business world for Leader to Leader.

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