Do I need to report 1099-LTC BENEFITS?

[pfosscamp]

My mother in law received a 1099ltc benefit form.  When I go to enter the income it says only enter if box 3 "Per Diem" is marked.  It is not the box that is marked is "Reimbursed Amount"  Do I still need to report this income?

[PatriciaR]

Here are the steps to enter the 1099-LTC.  The 1099-LTC form is entered in the Wages & Income section where you will be asked about the reimbursements as well as the costs/expenses.

As you work through the TurboTax interview, you will be asked for the amount from the 1099-LTC as well as actual costs/expenses. If costs/expenses are equal or greater than the reimbursed amount, none is taxable. The 1099-LTC form is entered in the Wages and Income section. Follow these steps:

• Select Federal Taxes (top of program)
• Select the Wages & Income (sub-tab)
• If shown, select "Skip to all income" in order to see all income options
• Scroll down to Less Common Income
• Select Miscellaneous Income, 1099-A, 1099-C
• Select Long-term account distributions (Form 1099-LTC)  (click on first screenshot below for more detail)

As you work through the TurboTax interview, you will come to page that will ask about your costs as well as your reimbursements (click on second screenshot below for more detail)

NOTE:   If the policy was issued before August 1996, different rules apply.

[billou]

If expenses exceed benefits or Line 3  on my  1099LTC which indicates the amount paid is not taxable then turbo tax ignores the whole matter and my tax return shows nothing for LTC

[MaryK4]

That is correct.  See When is long term care insurance reimbursement considered income?

@billou

[connie09]

this is NOT helpful. turbotax is saying a QUALIFIED ltc benefit is for services provided by LICENSED health care practitioners. that is NOT true. it is for custodial care, in other words care for a person who needs assistance with activities of daily living, NOT skilled  care. TURBOTAX' definition is contradictory. in addition, ltc can be required for a limited time for a condition that is NOT considered chronic, ie for a condition that is expected to improve over time and the person will regain ability to perform activities of daily living.

"Qualified long-term care benefits are payments received for the qualified long-term care services provided by a licensed health care practitioner (WRONG) for the care of a chronically ill WRONG individual."

"Generally, qualified long-term care services means necessary diagnostic, preventive, therapeutic, curing, treating, mitigating, and rehabilitative services and maintenance or personal care services."

 all of the above require skilled services of a licensed professional EXCEPT personal care services!!!!

"A licensed health care practitioner is any physician, registered professional nurse, licensed social worker, or any other individual who meets the requirements to be licensed."

a person who needs assistance with activities of daily living does NOT require the services of a professional yet still qualifies for long term care benefits for the very reason that s/he needs assistance with adls.

so again...TURBOTAX' definition is both incorrect AND contradictory. but by ITS definition, i received NO QUALIFIED BENEFITS because i am receiving personal care, not care from a licensed professional. yet turbotax is deeming the whole amount taxable. this can't be!!!

AND my policy was issued in 1986. there is no option for me to fill out any questions for such a plan

AND my per diem is only $50 a day. from everything i've read, that should NOT be taxable. i have paid a premium of $30 per month for 34 years, 7 months. why would the services i get be taxable when i have paid a monthly premium to get those benefits?

and TURBOTAX' help section is totally useless in answering this question. i should NOT have to pay someone to answer this question or to fix your site so i can enter what i am PAYING for the personal care that i'm getting from a NON-LICENSED PERSON!!!!

I WAS FINALLY ABLE TO REACH A PERSON WITH TURBOTAX, ASKED MY QUESTION, WAS PUT ON INTERMINABLE HOLD, WAS TOLD I WAS BEING TRANSFERRED, AND WAS DISCONNECTED.

TOTALLY UNSATISFACTORY!!!!!!!!!!!!!!!!!!!!!!!

WHAT CAN BE DONE TO GET ME THE APPROPRIATE ANSWER FROM A TURBOTAX REP?

[MarilynG1]

@connie09 Notably, this “per diem” rule will not apply, regardless of payment size, if the payments are fully allocable to the reimbursement of the insured’s long-term care insurance expenses.

Click this link for more info on When is LTC Considered Taxable. 

[costtoomuch]

Do I not need to report the amount from the 1099LTC if the box Reimbursed Amount is checked?

[WendyN2]

No, you still report this information. The IRS will be expecting it. Just make sure that you fill everything out correctly so that it "balances" itself out. You do still need to include this information on your tax return. Again, be sure to specify that it was reimbursed. 

[kwsherman]

I report my mothers benefits and expenses on the 1099-ltc form but then am  told to remove them on the 8853 because they are reimbursable and not taxable. Is this correct?  Do i just $0 out the form 8853 info?

[DaveF1006]

Yes, according to this Turbo Tax link: here are the steps for reporting:

• Select Federal Taxes (top of program)
• Select the Wages & Income (sub-tab)
• If shown, select "Skip to all income" in order to see all income options
• Scroll down to Less Common Income
• Select Miscellaneous Income, 1099-A, 1099-C
• Select Long-term account distributions (Form 1099-LTC)  

As you work through the TurboTax interview, you will come to page that will ask about your costs as well as your reimbursements, here is where you generate the 8853 by the answers you give regarding the reimbursements. 

[gjayhess]

If the Reimbursed Amount Box is checked, do I need report my LTC benefits?

[gjayhess]

My LTC benefits are checked in the Reimbursed Amount Box. Therefore I do not have to claim my benefits as income. Correct?

[MarilynG1]

You report the amount on your 1099-LTC as income; however, in the same section in TurboTax, you report the amount of expenses associated with this income, so that the benefits are not taxable.

Please follow these steps:

1. Log into Turbo Tax.
2. Go to federal>income and expenses>less common income
3. Go to the bottom of that section and select Miscellaneous Income, 1099-A, 1099.
4. Select Long-term care account distributions (Form 1099-LTC)

[zootie]

The LTC went directly to my husband's home health care provider agency...not to me.

It was equal to the service provided. Thank You

I was not sent a 1099-ltc but I know the exact amount for 2021.

What should I do on Turbo??

[DianeW777]

No. Generally, your long term care (LTC) reimbursement is only taxable if the amount used exceeds your medical expenses. 

It may be best to read the information below for an overall picture:

A qualified long-term care insurance contract is treated as an accident and health insurance contract.  Thus, amounts (other than dividends or premium refunds) received under such a contract are treated as amounts received for personal injuries and sickness and are treated as reimbursement for expenses actually incurred for medical care.

Since amounts received for personal injuries and sickness are generally not includable in gross income, benefits received under qualified long-term care insurance are generally not taxable. However there is a limit on the amount of qualified long-term care benefits that may be excluded from income.

Generally, if the total periodic payments received under all qualified long-term care insurance contracts (and any periodic payments received as an accelerated death benefit under IRC Section 101(g) exceed a per diem limitation, the excess must be included in income. If the insured is terminally ill when a payment is received, the payment is not taken into account for this purpose.

As of 2021, the maximum is up to $400 per day. This is true even if your daily long-term care expenses are under $400. If your policy pays more than the limit and your expenses are lower than what you receive, the excess counts as taxable income. the excess payment amounts are taxable as income when benefits are paid.

• Notably, this “per diem” rule will not apply, regardless of payment size, if the payments are fully allocable to the reimbursement of the insured’s long-term care insurance expenses.

However, payments in excess of reimbursements may become taxable to the extent they exceed the per diem limitation as calculated above.