How do I report a cash payment "in lieu of continuing to keep your long-term care insurance policy in force"? The #3 box on 1099-ltc is checked "Reimbursed Amount." The company has given me the total premiums paid. But your software only asks about the "per diem" box amounts. On my 1099-ltc "reimbursed amount" is checked. This is a cash payout to end the policy.
Life insurance proceeds that are paid in a lump sump are not taxable unless the cost exceeds the premiums that were paid. However, if the amounts were issued in installments, then it is considered an annuity and is taxed as such.
Usually, to determine the taxable portion of life insurance proceeds, you would take the total proceeds minus any premiums, refunds, rebates, dividends, and/or unpaid loans that were not included in your income. The difference will result in the taxable amount.
Please refer to the Internal Revenue Service Publication 525, Taxable and Nontaxable Income, for further information. The taxability of various life insurance disbursements begin on page 21 of the publication.
To enter the taxable amount:
Thank you. Makes sense. But since I received a 1099-ltc, and not a 1099-r, it seems that Turbotax should have been written to deal with this situation under the 1099-ltc section. Why make the customer come to the forums when they could have coded the program to respond to the actual situation--receiving this kind of 1099-ltc. I expect more from Turbotax.