The long-term care section under the path of Less Common Income > Miscellaneous Income > Long-term care account distributions (Form 1099-LTC) needs improvement.
Per numerous threads on the Community forum, there is much confusion on this subject, therefore asking Employee Tax Experts to pass along this feedback to their product development team.
@AnnetteB6 @DavidD66 @DawnC @AmyC @MarilynG @MarilynG1 @KrisD15
Why don’t the step-by-step questions mirror the boxes and entries on Form 1099-LTC, similar to the behavior for other 1099s (e.g INT, DIV)? It seems to ask for some of the information from the form, but not all. It doesn’t ask which checkbox in box 3 is marked (per diem or reimbursed amount), or box 4 – qualified contract. I think the entries in these boxes help determine whether Form 8853 needs to be generated.
As @GayleS03 noted last year, refer to the IRS Form 8853 Instructions, specifically the flowchart at top of page 9. If you answer ‘no’ to the first two questions, it states to not complete Section C. Yet, by answering TT’s questions as noted below (sample responses), Form 8853 is generated.
- Distribution – yes; Inherit – no
- Insured person – (person1); Policy holder – (person1)
- Did (person1) receive – yes
- Did any other person receive – no
- Terminally ill - no
- Per Diem Gross Benefits – blank (since it was a reimbursement, not per diem)
- Accelerated Death Benefits – blank
- LTC No. of Days – this is not noted on the 1099-LTC, so is very unclear and confusing, entered 365
- Cost of Services – again, not on the 1099-LTC, so assume you need to retrieve elsewhere – entered $100k for facility costs
- Total Reimbursement – assume this is referring to box 1 from the 1099-LTC when the reimbursement checkbox is marked; if true, should clarify interview question – entered $25k
Despite entering the above, the next page shows a blank LTC amount for person1. Then the next page states that none of reimbursements are taxable, which is as expected. Yet, in forms view, Form 8853 was generated. And via Print Center, if you print Tax Return Only, Form 8853 is included. So, I assume it’s also electronically transmitted. Again, according to the instructions, Section C on Form 8853 is not required because this was neither per diem or accelerated death benefit payments.
In summary, the interview questions can be improved and based on the responses, it should follow the IRS instructions so that the appropriate action, or inaction, is taken.
@DeanM15 @laurabowles4711
