Since your form has Box 3 (Reimbursed Amount) and Box 4 (Qualified Contract) checked, you are correct: this money is not taxable. It is simply a "repayment" for medical expenses your mother incurred before she passed.
You will answer the questions this way:
- "Did you receive a distribution from a Long-Term Care contract?" Select YES. (Even though it was for your mother, you are the recipient of the check and the form).
- "Did you inherit this contract?" Select YES.
- "Did you receive a per diem payment or an accelerated death benefit?" Select NO.
- Leave the box blank (or enter $0) for both Per Diem Gross Benefits and Accelerated Death Benefits.
- Enter the qualified expenses and the amount that were reimbursed from Box 1 on the LTC Costs screen. These boxes should have the same numbers. You can leave number of days empty.
This will make the amount non-taxable.
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