How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask jgordosea Your Own Question

jgordosea
jgordosea, Enrolled Agent
Category: Tax
Satisfied Customers: 3013
Experience:  I've prepared all types of taxes since 1987.
3653323
Type Your Tax Question Here...
jgordosea is online now
A new question is answered every 9 seconds

If a Beneficiary of a trust has medical expenses paid out of

Resolved Question:

If a Beneficiary of a trust has medical expenses paid out of the trust, are they able to deduct those expenses from their personal return
Submitted: 5 years ago.
Category: Tax
Expert:  jgordosea replied 5 years ago.

Greetings,

 

Whether or not the beneficiary can deduct the expenses depends on what type of trust it is and whether the beneficiary is also the grantor.

 

Is the beneficiary also the grantor?

 

Is the beneficiary related to the grantor?

 

Is it a revocable or irrevocable trust?

 

Does the beneficiary, as the grantor, declare all of the income of the trust on their own 1040 ( aka grantor trust) ?

 

Thank you for the information to give a proper answer to your question.

 

 

 

 

Customer: replied 5 years ago.
This is the beneficiary's Mother's revocable trust. Taxpayer (Beneficiary) is not the grantor. She is the Grantor's daughter. I hope these answers will help you. Can you please give me the ruling number or reference for your answer? Thank you
Expert:  jgordosea replied 5 years ago.

Greetings,

 

The Internal Revenue Code defines a grantor trust as a trust in which the grantor has one or more of the powers specifically described in Internal Revenue Code Sections 673 to 677.

 

Income earned by a grantor trust is taxable to the grantor, not the beneficiary. To the extent that a trust is a grantor trust all of the income, deductions, and credits flow through to the grantor and are included on the grantor's own personal tax return.

 

From the article at http://www.aicpa.org/pubs/taxadv/online/jan2005/savoth.htm

Beneficiary Taxation

Trust distributions to a disabled beneficiary may result in taxable income. The beneficiary will report as income his or her share of the income distribution deduction calculated by the trust. If the trust makes a distribution by paying the beneficiary's personal expenses, the expenses are not deductible by the beneficiary, unless they qualify as a reduction of adjusted gross income or as an itemized deduction. Qualified payments can include deductible medical expenses, such as the costs of prosthetic devices, adapting a car or van for a handicapped person, prescribed drugs, nursing services, a wheelchair or a hearing aid. The trust is entitled to an income distribution deduction for the payment of such personal expenses; however, it cannot deduct the payments of the beneficiary's medical expenses.

 

So, generally it is possible for a beneficiary and not the trust to deduct medical expenses paid for the beneficiary for trusts such as the one you describe.

 

Please be aware that trust funds provided by a third party may disallow a deduction for medical expenses. See Rev. Rul. 77-230

"To the extent medical expenses arising from or related to the injury are compensated for by the United States and not by the individual, the individual is not entitled to a medical expense deduction for such expenses under section 213 of the Code."

 

Of course, you should confirm that the trust documents and the payments conform to the requirements mentioned in the above references in your case.

 

Best wishes.

jgordosea, Enrolled Agent
Category: Tax
Satisfied Customers: 3013
Experience: I've prepared all types of taxes since 1987.
jgordosea and other Tax Specialists are ready to help you

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
< Last | Next >
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
  • I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight. Bonnie Chesnee, SC
  • Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation. John Minneapolis, MN
  • Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. Orville Hesperia, California
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
 
 
 

Meet The Experts:

 
 
 
  • Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
< Last | Next >
  • http://ww2.justanswer.com/uploads/KU/KUMI95/2013-9-30_195031_kumar.64x64.jpg Wallstreet Esq.'s Avatar

    Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
  • http://ww2.justanswer.com/uploads/CU/Cuttinggirl/2011-10-29_03719_wcrop2.64x64.jpg Wendy Reed's Avatar

    Wendy Reed

    Enrolled Agent

    Satisfied Customers:

    3052
    15+ years tax preparation and tax advice.
  • http://ww2.justanswer.com/uploads/CATax/2009-08-04_204548_Mark.jpg Mark D's Avatar

    Mark D

    Enrolled Agent

    Satisfied Customers:

    985
    MBA, EA, Specializing in Business and Individual Tax Returns and Issues
  • http://ww2.justanswer.com/uploads/IN/insearchoftheanswer/2013-8-16_0233_attorney.64x64.jpg Richard's Avatar

    Richard

    Tax Attorney

    Satisfied Customers:

    3229
    29 years of experience as a tax, real estate, and business attorney.
  • http://ww2.justanswer.com/uploads/MY/MyVirtualCPA/2012-7-5_44024_cookmegan1.64x64.jpg Megan C's Avatar

    Megan C

    Certified Public Accountant (CPA)

    Satisfied Customers:

    6121
    Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
  • http://ww2.justanswer.com/uploads/JG/jgordosea/2012-6-7_43138_GordosVeritas.64x64.jpg jgordosea's Avatar

    jgordosea

    Enrolled Agent

    Satisfied Customers:

    2783
    I've prepared all types of taxes since 1987.
  • http://ww2.justanswer.com/uploads/OZ/ozaukeecpa/2012-6-7_193219_Picture1croppedandshrunk.64x64.jpg MequonCPA's Avatar

    MequonCPA

    Certified Public Accountant (CPA)

    Satisfied Customers:

    2231
    CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.