Hello! My wife and I live in Washington state. We have a third-party long-term care (LTC) insurance policy to qualify for an exemption from the WA LTC tax. However, my spouse recently received a 1099-R form showing a gross distribution, even though we haven't withdrawn or used the LTC funds directly.
Here are my questions:
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Benefits paid under a long-term care insurance plan would normally be reported on Form 1099-LTC and are often nontaxable.
Were any funds withdrawn through the plan? You stated the funds weren't withdrawn or used "directly".
You could receive a Form 1099-R if your policy included an annuity or life insurance contract.
Contact the payer for an explanation.
See this TurboTax tips article for more information.
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