LTC Income

[ProBowler9]

Upon review of my tax forms, I see $8,534 listed as Taxable Long-Term Care income. I can't find any source for this and I cannot determine why TurboTax is listing this as income. Clicking Update, it says the source is a 1099-LTC. However, under the Step-by-Step question of Did you receive a distribution from a long-term care contract (Form 1099-LTC, I answered no. I'm baffled.

[ErnieS0 · Accepted solution]

Perhaps you entered long-term care information by mistake?

Here's how to check your return:

1. Tap Forms in the top right
2. In the left column Forms in My Return, search for Form 8853.
3. Tap the form to open it.
4. You will see Section C Long-Term Care (LTC) contracts
5. Tap Delete Form at the bottom of your screen
6. Tap Step-by-Step in the top corner to get back to the interview mode

[ProBowler9]

Hi Ernie, Thanks for responding to my question. While waiting to hear from you, I did indeed find I had a 1099-LTC. Your directions to locate it were spot on, of course. However, because this is a tax qualified policy, I do not believe any monies from the insurance company are taxable. All monies paid by them went to the care agency. Also, and more importantly, line 26 of Form 8853, page 2 is "0" - as in not taxable. Is that correct?

My dilemma - Turbo is showing the amount paid by the insurance company for care as income ($8,534) which it should not, if I am correct, yet shows "0" due on the 8853. Also, the 1099 does NOT have box 4 checked telling the IRS that it is a tax-qualified LTC policy. I will call the insurance company if you concur. Thank you.

[Marie451]

I also received long-term care payments that went directly to the provider of services.  I received a 1099-LTC but didn't enter it as a 1099.  I reported the amount in the medical deductions topic as a reimbursement.  This probably would only work if you itemize deductions though.

If not, I found this on a June 2019 Turbotax entry online: " Generally, your LTC reimbursement is only taxable if they exceed your medical expenses."   So, I interpret this to mean you can ignore it.                                                                                                                 

[Vanessa A]

Yes, if the amount you were reimbursed does not exceed the amount you spent, then you can just ignore it.  You are correct, it will only work if you are itemizing your expenses, otherwise, it will not be reported anywhere. 

@Marie451