:

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!
Reply to
Don
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).
--
Alan 
http://taxtopics.net
Reply to
Alan
responding to
formatting link
That is very helpful, Alan. It also simplifies things a good bit.
Thank you for your reply.
Don
Reply to
Don

Further it seems to me that the amounts paid to the nursing home would be a medical expense deduction.
--
> 
> 
 Click to see the full signature
Reply to
remove ps

BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.