Can medical expenses funded from a Special Needs Trust be deducted?

[Have it all]

Hello –

Can medical expenses for a dependent child that are funded from a Special Needs Trust be deducted by the parents?

Situation:  Parents are going to deduct medical expenses for the tax year.  The dependent child (fully disabled, under 18) has a Special Needs Trust (SNT).  Can qualifying medical expenses funded from the SNT be rolled into the family’s deductible medical expenses?  Can qualifying medical expenses funded from an ABLE account be rolled into the family's deductible medical expenses?

Thanks!

[Anonymous_]

There are different types of SNTs. Is the trust a QDT (QisT), for example?

Generally, meaning almost always, medical expenses are not deductible on Form 1041, but a QDisT does get a much higher exemption than other nongrantor trusts ($4,700 for 2023). In most all events, any income the trust generates would be taxable for the child (typically a huge advantage).

You really should seek guidance from a local tax professional for this matter.

[Have it all]

Thank-you for your assistance.

Yes, the trust is a Qualified Disability Trust, so it has the higher exemption. But that is for the income that stays in the Trust.

The disbursed income flows to the child, hence the question.  The income is taxed to him (and since he is a dependent, taxed to the parents).  It seems to make sense that if the income is used for medical expenses, it can be deducted as such by the taxpayer (in this case, the parent).   I find zero information in the IRS instructions regarding this in particular.

You are correct - I should seek the advice of a professional!  I have occasionally over the years, but they generally say I am doing fine with Turbotax and don't really need to spend the extra money to have them assist.  

[Anonymous_]

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@Have it all wrote:

.....if the income is used for medical expenses, it can be deducted as such by the taxpayer (in this case, the parent).  

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Yes, if the tax liability for the income is the parent's, the medical expense(s) should be deductible as an itemized deduction.