Re: Filing Income Tax Return for Special Needs Trust

March 5, 2011

If a trust is generating income, it needs to be reported on a tax return. The

trust in a parentâ€™s SS# would have the income reported on that personâ€™s

return, if they are required to file one. The one with an EIN# generally files

a 1041. If the trust did not generate income then no tax return is required.

Our son has a special needs trust and a 1041 is filed for it on a yearly basis

and if there is tax due then it is paid.

C

From: Get Real

Sent: Saturday, March 05, 2011 12:01 PM

IPADDUnite

Subject: Filing Income Tax Return for Special Needs Trust

I'm asking this question on IPADD as I have several parents who have asked me

this question, so I'm hoping can respond to this. To those of us who have

set up Special Needs Trusts for our loved ones with disabilities; when do you

need to file a return? In my situation the two family members (one in state and

one out of state) have simple savings accounts that are titled in the Trusts

with less than $5,000.00 in each Trust. One has her own EIN number for her Trust

and the other has her trust under a parent's social security number. Is a 1041

or other form required now that there is money in the Trusts?

Thanks. ~ P.

March 5, 2011

It depends on how the SNT was drafted. If as a Grantor Trust (usual method of

drafting for a 3rd party SNT, the parent's SSN could be used and no separate

1041 and I'll 1041 is required. If a Grantor Trust but an FEIN is used, returns

for Trust is filed as an " information only " return and all income is reported on

the parent's 1040. If not a Grantor Trust, or the Grantor is deceased, then

depending again how it is drafted, it could be filed as a QDT - qualified

disability trust, or as a complex trust (different exemptions - depending). They

should be contacting the attorney who drafted the documents, and the attorney

should NOT charge for that call.

Rubin

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From: Get Real [mailto:marcp2@...]

Sent: Saturday, March 05, 2011 01:01 PM

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