Q: Can grantor of irrevocable income only grantor trust pay taxes on trust income under their own SS#?
The attorney who set up the irrevocable income only grantor trust said the grantor could file taxes on trust income using their own SS#, but now a different attorney says if the trust doesn't obtain its own tax ID, the grantor may be deemed ineligible for Medicaid. Which is accurate?
A:
When dealing with an irrevocable income-only grantor trust, it's important to understand how the income is reported and how it might impact Medicaid eligibility. If the trust is set up as a grantor trust, the income can be reported under the grantor's Social Security number, meaning the grantor pays taxes on the trust income.
However, this approach could have implications for Medicaid eligibility. If the trust doesn't obtain its own tax ID, it might be viewed as not fully separate from the grantor's assets, potentially affecting eligibility for Medicaid benefits.
To ensure compliance with both tax regulations and Medicaid rules, it may be wise to obtain a separate tax ID for the trust. This can help keep the trust income distinct from your personal income, reducing the risk of any issues with Medicaid.
Nina Whitehurst agrees with this answer
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