If I received a 1099-LTC form for refunded premiums for a surrendered long-term care policy, is the refunded money taxable?

[ecnewsome1018]

I did not receive benefit payments and was not reimbursed any monies, just the refund of premiums from the surrendered policy.

[MichaelL1]

I understand that.

Did you deduct any the premiums you made over the years on the tax returns?  

This is what determines if anything might be taxable to you.

[MichaelL1 · Accepted solution]

The refund is included in the beneficiary's gross income and is taxable, to the extent it was either excluded from the owner's income or deducted by the owner. It must be included as income in the year it is received."

If you took a deduction for your long term care premiums as a medical expense in previous years (Schedule A itemized deductions), you need to report it as a "reimbursed deduction from a prior year". If you did not take the deduction, it is not taxable income.

Here is how to enter it to line 21 in TurboTax:

Under Wages & Income tab: 

1. On Your Income screen, scroll way down below All Income to Less Common Income open the menu (if you don't see All Income, click on Add more income first and you will see it)
2. Click on Start next to Miscellaneous Income at the bottom, 
3. Choose Reimbursed deductions from a prior year
4. Check the box next to 1099-LTC and enter the amount of the full 1099LTC
5. then make a duplicate negative entry for the part that is not taxable (if any).
   

[Jmb2]

My provider went bankrupt and was taken over by my state.it was penn treaty in pennsylvania. Then when they raised the premium they gave the option of canceling and receiving a refund. The refund was more than we paid in , we did cancel and got the refund. Is the whole refund taxable or the amount that exceeds the premiums.

[lg20467]

These instructions failed.  There is no checkbox for the 1099LTC.  Select reimbursment type, then the amount.  A duplicat entry cannot be made.

[Canovotny]

I am in the same situation this year. We have unqualified long term care policies (no deductions of premiums taken) that we are surrendering. I can’t find much info. I would like a confirmation that the proceeds are not reportable/taxable on IRS 1040.

[Cathy85]

I didn't itemize deductions for federal but received a state income tax credit for long term care premiums paid. How do you report the income for return of premium for the state return?