No, the long term care distributions are not taxable if they are spent for long term care of the insured individual.
As you enter the amounts received from the Long-Term Care policy, you must also include that the payments were used to pay for long-term care for the insured individual as well as the total amount paid for the long-term care. If the payments received from the policy exceed the amounts spent for care, then the payments will not be taxable as income.
Go back through the section of your return where the distribution was entered and be sure that you have also indicated that the funds were spent for the care of the insured individual.
Use the following steps to go directly to that section of your return:
- For
CD/downloaded TurboTax locate the search box in the upper right corner
- Type in “long term care expenses” and click Find
- The search
results will give you an option to “Jump to long term care expenses”
- Click on the blue “Jump to long term care expenses” link
[edited 2/23/19 | 9:17 am PST]
