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Level 1

Are long term care distributions taxable?

Hello, I am attempting to file taxes for my mother, who receives long-term care payments for her poor health. I have read these payments are tax-free, but when I entered them into TurboTax, it significantly boosted her minimal retired income and now she owes $3,000. Form 8853 has an amount of $18,139 on it. Is this correct? Does she have to pay taxes on this?Hello, I am attempting to file taxes for my mother, who receives long-term care payments for her poor health. I have read these payments are tax-free, but when I entered them into TurboTax, it significantly boosted her minimal retired income and now she owes $3,000. Form 8853 has an amount of $18,139 on it. Is this correct? Does she have to pay taxes on this?

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Accepted Solutions
Level 3

Are long term care distributions taxable?

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]
2 Replies
Level 3

Are long term care distributions taxable?

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]
Level 3

Are long term care distributions taxable?

answer edited