An EIN works like a social security number. Generally, revocable trusts do not need an EIN, since they are granting trusts and trust income is reported on the trust creator's tax return. If you have created a revocable trust, you can revoke the trust at any time and “regain possession of the trust assets”. A living revocable trust usually does not need its own TIN (tax identification number) while the grantor is alive.
Actually, there are two answers here. Yes, a revocable trust needs a tax ID. But you don't need your own tax ID. A revocable trust uses the grantor's social security number as tax identification.
The grantor will place the assets in the revocable trust and its SSN will be used for tax purposes. The grantor remains liable for taxes invoked by the revocable trust, but the grantor also continues to have full control over the terms of the trust and when it is dissolved. It's important to have this for filing tax returns. Revocable trusts don't necessarily require an EIN, since you can use the grantor's social security number, your own, if you created the trust if you want.
However, the IRS recommends that both revocable and irrevocable trusts have their own tax identification number (EIN). If you have an income-generating trust, you may need an employer identification number (EIN). An EIN is a federal tax identification number that a trust, estate or company must use to report federal and state income taxes. Not all types of trusts require an EIN.
Revocable trusts generally don't need an EIN because their income is included in the trust creator's tax return, which is known as the grantor or trust. Irrevocable trusts always need an EIN if they contain income-producing assets. In short, living revocable trusts don't need EIN. Instead, these trusts use the SSN of the trust grantor.
However, after the death of the grantor of the trust, the living revocable trust instantly becomes an irrevocable trust, and that will require an EIN to perform actions such as accessing trust funds, etc. To determine if your trust needs a tax identification number (EIN), you must first determine what type of trust you have. Although a trust exists as a separate entity from the grantor or grantors who created the trust, the proceeds of the trust pass directly to the grantors. Usually, the trust contains instructions on what should happen to the trust assets after the grantor's death.
For example, if you want to leave your home through the trust, you must sign a new deed proving that you are now the owner of the home as the trustee of your living trust. The successor trustee, the person you appoint to administer the trust after your death, simply transfers ownership to the beneficiaries you named in the. Revocable trust income is taxed as income to the grantor and included in the grantor's tax return. You can be the trustee of your own living trust, maintaining full control over all assets in trust.
These trusts are called revocable because you can make changes to them, and they are known as living trusts because the grantor of the trust is alive. However, your situation may be different if you are making changes because the grantor of a revocable trust has died. Different types of living trusts can help you avoid probate, reduce estate taxes, or establish long-term property management. If your revocable living trust is held together (you and your spouse or domestic partner), simply select a person's Social Security number as the one you will use.
Once the grantor dies and the trust becomes irrevocable, you will need to complete the EIN application as soon as possible in order to properly report all post-death transactions under the trust's EIN. If a bank or other financial institution requests the EIN (Employer Identification Number) or TIN of your revocable living trust, provide your social security number. If the trust has stocks or bonds, increases in value and interest payments are converted into income of the trust. While you're alive, your revocable living trust doesn't have a separate tax identification number (TIN) or EIN and you don't need to file a separate trust tax return.