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Why is an an tax number needed for an estate checking account.Do you have to pay taxes on this.

Detroit, MI |

My wife is an only child and her mother and father has past away.
She is the executer of the estate. Their is checks to be cashed and money market accounts. She was told to move them(from the lawyer).An create an estate account .To pay for stuff that goes along with running the estate.
My question is will she end up paying taxes on the money left over in the accounts.Because of the IRS having their nose in it.
She is to inherit everything in the end.

Attorney Answers 4


The estate must have a tax number because the social security number for your Wife's parents is no longer good. The estate is considered a separate entity, like a corporation or a Trust.

Federal estate taxes are paid by the estate, not by the people who are heirs to the estate. If your inlaws have a huge estate, there will be estate taxes owed to the IRS by the estate.

The taxes a state may charge can apply to both your Wife or to the estate. Frankly, by worrying about the IRS you are avoiding the more important issue of money that you may owe to the state taxing officials.

Hope this perspective helps!

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Just to clarify the previous poster's answer: There may or may not be a number of taxes due for the estate 1.)State inheritance tax, 2.) state estate tax, 3.) federal estate tax. Also, and the reason your need an estate tax id number (EIN) is for estate income. Assuming no real trusts are involved, if the assets of the estate (from death of decedent to distribution to heirs/beneficiaries) are in an account or investments those accounts earn ESTATE INCOME. The ESTATE is required to file in many situations an Estate Income Tax Return (Form 1041). This is like a personal income tax return but for the decedent's estate. If this is a small estate there may not be enough estate income generated for there to be tax due, but it is a consideration. It is normal practice for the bank to open an Estate checking account with a unique tax ID number. The tax that is possible is on the income made by the estate assets, not the amount of money in the estate.

This is not legal advice nor intended to create an attorney-client relationship.

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This is basic to and required for estate administration. When a person dies only the executor can act for the estate. The executor is required to transfer all assets into the estate. The estate needs an EIN to establish bank accounts, investment accounts and to report its income and expenses to the IRS. Income, expenses and distributions of income during the course of the estate administration must be reported to the IRS via Form 1041 and the corresponding state fiduciary return. To do all this the estate needs an EIN.

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Mr. Fromm is licensed to practice law throughout the state of PA with offices in Philadelphia and Montgomery Counties. He is authorized to handle IRS matters throughout the United States. His phone number is 215-735-2336 or his email address is , his website is and his blog is

LEGAL DISCLAIMER Mr. Fromm is licensed to practice law throughout the state of PA with offices in Philadelphia and Montgomery Counties. He is authorized to handle IRS matters throughout the United States. His phone number is 215-735-2336 or his email address is , his website is and his blog is <> Mr. Fromm is ethically required to state that the response herein is not legal advice and does not create an attorney/ client relationship. Also, there are no recognized legal specialties under Pennsylvania law. Any references to a trust, estate or tax lawyer refer only to the fact that Mr. Fromm limits his practice to these areas of the law. These responses are only in the form of legal education and are intended to only provide general information about the matter within the question. Oftentimes the question does not include significant and important facts and timelines that if known could significantly change the reply or make such reply unsuitable. Mr. Fromm strongly advises the questioner to confer with an attorney in their state in order to ensure proper advice is received. By using this site you understand and agree that there is no attorney client relationship or confidentiality between you and the attorney responding. This site should not be used as a substitute for competent legal advice from a licensed attorney that practices in the subject area in your jurisdiction, who is familiar with your specific facts and all of the circumstances and with whom you have an attorney client relationship. The law changes frequently and varies from jurisdiction to jurisdiction. The information and materials provided are general in nature, and may not apply to a specific factual or legal circumstance described in the question or omitted from the question. Circular 230 Disclaimer - Any information in this comment may not be used to eliminate or reduce penalties by the IRS or any other governmental agency.

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Your summary does not say anything about the size of the estate. The practical problem that you have is that the *estate* cannot use the social security number of the decedents, any longer. The financial institutions are required to associate those assets with a tax identification number, and so you need to apply for that number by filing an SS4 form with the IRS. Whether or not the estate needs to file a tax return depends on the assets and the income the assets generate. In the event that there is no income, then the best practice is to file a Form 1041 that indicates it is the final return and show a $0 balance. You would also need to file a final Form 1040 for the decedent(s), to deal with any income that accrued prior to opening the estate(s).

If this is a Michigan estate, there is no inheritance tax. Depending on the date of death and the size of the estate, there would likely be no federal or state estate taxes, either.

James Frederick

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