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:
- Type Form 1099-R in Find or Search
- Click the Jump to form 1099-R link
- Navigate through the prompts to begin entering your information
- Your entries will help TurboTax determine any taxable amounts.
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