1099LTC

[ABKB]

1099-LTC . MIL received $67,780 per diem qualified benefits for 2023. Cost of Care Home is $60,000. for the year. Is the $7,780.00 is taxable??  Or can I reduce that amount by her health insurance premiums paid and medical supplies paid?

[DavidD66]

Probably not.  The general rule is that benefit payments received under a qualified LTC policy are tax-free.  A qualified policy must be guaranteed renewable, and can’t have a cash value. Most LTC policies sold these days are qualified policies.  To be sure, you can refer to your policy or contact your insurer.

Some qualified policies pay a fixed daily benefit, regardless of actual costs. For 2023, benefits paid under such a per-diem policy are automatically tax-free up to $420 per day.  If benefit payments exceed the cap, they’re still tax-free if actual costs for qualified LTC services equal or exceed the payments.  If your case, if the amount received was for the entire year, it is not taxable.  

You should have received a Form 1099-LTC.  To enter your Form 1099-LTC, see the following TurboTax Help Article:  Where do I enter Form 1099-LTC?

[ABKB]

Do I still enter in her medical expenses for the year?  On the question that asks enter the portion of the $67,780 that is qualified do I enter the full amount?  What do I put for the LTC period? She was paid monthly. I did one period that was 365 days, is that correct?

[DavidD66]

Box 4 of the 1099-LTC, if checked will indicate if the policy is qualified.  However, that box is optional for the provider to fill out, so if it is not checked that doesn't mean the policy is not a qualified policy.  I can't tell you whether or not your policy and the benefits received are qualified or not (although they probably are).   You would have to refer to your policy or contact the insurer to verify.  If the policy is a qualified policy, then all the benefits will be qualified.  The frequency of payment does not matter.  And yes, one 365 day period would be correct if she was in the facility all year.