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Do I need a Tax ID# to open estate bank account or can Administrator use his SS#? Small amount of $ involved here.

Worcester, MA |

Administrator needs to open a bank account for the estate to hold small amount of probate funds (10k max). This will obviously produce less interest income than $600 per year, which is what's necessary to file a 1041.

Can we forego the tax ID# route and just have the proceeds taxable to the administrator? The estate needs to write like 3 checks and then the account would be needless. We just dont want to get a tax ID# if we don't need to.

Thank you all for the answers. While I know its easy to get a Tax ID# online, won't the IRS be looking for a 1041 next April 2011 if I do so? Even though the income would be below the filing threshhold, wouldnt I have to file a final 1041 to close out the estate with the IRS?

Attorney Answers 3

  1. An estate account needs its own tax ID#.

    You can not intermingle estate proceeds or interest on proceeds or tax liabilities of the estate with the personal finances of the administrator.

    Yes, opening an estate account for the purpose of only writing a couple of checks is a royal pain in the neck, but, this is what the law requires.

    This answer is provided for informational purposes only. Actual legal advice can only be provided in an office consultation by an attorney licensed in your jurisdiction, with experience in the area of law in which your concern lies.

  2. It is very easy to obtain the tax id number you need. The law requires that the funds from the estate be kept apart from other funds so that if an accounting is ever required the documents will confirm that the estate was handled properly.

  3. You must get a taxpayer ID number for the estate. You cannot commingle estate and personal funds.

    If this is a Massachusetts estate, the threshold for filing a Massachusetts Form 2 return is $100 in actual income. Filing income tax returns starts the clock ticking on any statute of limitations for failure to file or pay taxes owed.

    Circular 230 Disclosure: Pursuant to recently-enacted U.S. Treasury Department Regulations, we are now required to advise you that, unless otherwise expressly indicated, any federal tax advice contained in this communication, including attachments and enclosures, is not intended or written to be used, and may not be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any tax-related matters addressed herein.

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