Nursing Home, QIT, Medicaid, Spousal Diversion & Income Tax

My dad is in a nursing home on Medicaid. His income is from SS and a modest pension. Some of this income goes through a Qualified Income Trust and then to
my mom as spousal diversion. She in turn pays a chunk to the nursing home each month. I have no idea how to file their income tax. Any advice would be appreciated!
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On 3/27/14, 6:53 PM, Don wrote:

I assume we are discussing what is usually referred to as a Miller Trust. Your dad's income exceeds the allowable amount for Medicaid and under state rules the trust was created. The trust can provide a benefit to the well spouse as long as the well spouse's income is below a certain threshold. This trust is a grantor trust. As such, it is disregarded for tax purposes. A tax return for your father (I assume it will be a joint return with his spouse) is filed in the normal manner. I.e., income would include any of the line items you see on a 1040. The trust does not file a tax return.
Usually, the state department (E.g., Dept. of Human Services) that runs the medicaid program sets the guidelines for creating the trust and typically requires an annual accounting (not a tax return).
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Alan wrote:

Further it seems to me that the amounts paid to the nursing home would be a medical expense deduction.
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