How old is your daughter? Does she live with you? What other income
does she have? Is the trust effective now or after you die? Is it
irrevocable? Is it a grantor trust? If so, who is treated as the
grantor Is it a defective trust?
You have really not given us nearly enough information to be able to
give you a reasonable answer.
Your question can not be answered (see Stuart Bronstein reply) because
we do not know what kind of trust you created. Assuming we are dealing
with the very specific category of SNTs (Special Needs Trusts) and not
any other type of trust, then who gets taxed depends upon how the trust
If this is a first party trust, i.e., funded with the beneficiary's
assets, it is a grantor trust and the income and deductions belong to
the beneficiary and would get reported on the beneficiaries 1040. The
trust can have an EIN and a 1041 would be filed but it is an information
only return. I.e., you tell the government it is a grantor trust and you
identify the grantor. An EIN is not required and the the SSN of the
beneficiary would be used.
If this is a third-party trust, e.g. an SNT created by parents for the
benefit of their child then it would be an irrevocable trust (but see
below for an exception) with its own EIN. The trust would file its own
1041 income tax return. If the trust was created as a qualified
disability trust, then it gets a personal exemption just like an
individual. If not, then it is treated like any other trust and only
gets a $100 exemption.
The exception: The third party trust will also be considered a grantor
trust if the person creating it (typically the parent of a special needs
child) reserves to his/her self rights, powers and authorities. If the
trust is a grantor trust, all of the income and deductions belong to the
person who created and funded the trust not the beneficiary as is the
case in the first party trust.
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