Long Term Care expenses and reimbursments

[LisaVee]

What should I do if Long Term Care costs paid in 2019, were reimbursed by the LTC Insurance Company in the early January 2020?   I feel these reimbursements should be recognized on the 2019 tax return, so they off set the payments made by my Mother-in-Law to her LTC facility in 2019.  Am I thinking correctly?  If I don't use them to offset her 2019 payments made, she will end up being taxed on money she should not be taxed on.

This is the second Time I have posted.  Could some one please give me their help?

Thanks,

Lisa V

[LisaVee]

What should I do if Long Term Care costs paid in 2019, were reimbursed by the LTC Insurance Company in the early January 2020?   I feel these reimbursements should be recognized on the 2019 tax return, so they off set the payments made by my Mother-in-Law to her LTC facility in 2019.  Am I thinking correctly?  If I don't use them to offset her 2019 payments made, she will end up being taxed on money she should not be taxed on.

This is the second Time I have posted.  Could some one please give me their help?

Thanks,

Lisa V

[RobertG]

Insurance reimbursements are never taxable income.  

If you previously deducted the Long term Care Costs, you would have to report the reimbursement to the extent you received a tax benefit.

But if you never deducted the costs, you don't have to report the income.

[LisaVee]

Thank you so much.  That is what I thought, but the timing of the reimbursement (expense paid in 2019, reimbursed in 2020) is what had me confused.