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I am collecting on my LT care insurance policy. Are these…

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I am collecting on...

I am collecting on my LT care insurance policy. Are these receiopts taxable to me?

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I am collecting about $50,000 for 2016 as proceeds from my policy because I live in an assisted living nursing home. In preparing my 2016 tax return do I list these $50,000 proceeds under medical expenses as a credit against my nursing home expense?

Submitted: 9 months ago.Category: Tax
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9/16/2017
Tax Professional: Chad EA, CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional replied 9 months ago
Chad EA, CFP ®
Chad EA, CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional
Category: Tax
Satisfied Customers: 2,530
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Hello my name is ***** ***** I will be able to assist you today.

There are multiple factors involved in determine if your LTC policy payments will be taxable or excluded from your income.

A qualified long-term care insurance contract is treated as an accident and health insurance contract. Thus, amounts (other than dividends or premium refunds) received under such a contract are treated as amounts received for personal injuries and sickness and are treated as reimbursement for expenses actually incurred for medical care. Since amounts received for personal injuries and sickness are generally not included in gross income, benefits received under qualified long-term care insurance are generally not taxable.

You should receive a 1099 B at the end of the year which will assist you in completing your tax return. Please click on the link below for more information regarding the 1099 B in regards ***** ***** payouts

https://www.genworth.com/claims/long-term-care-insurance/1099-b.html

If any of the distributions are determined to be taxable you will need to complete IRS Form 8853. One of the purposes of the form is to "Report taxable payments from long-term care (LTC) insurance contracts "

I have also included a link to instructions for this form below.

https://www.irs.gov/pub/irs-pdf/i8853.pdf

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Tax Professional: Chad EA, CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional replied 9 months ago

I would be happy to answer any quesitons or concerns you may have about your long term care policy.

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Tax Professional: Chad EA, CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional replied 9 months ago

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