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My mother receives payments under a term care policy. It is…

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My mother receives payments...

My mother receives payments under a long term care policy. It is not per diem . I have a 1099-Ltc form from the company. Do I report it on the1040 at all ? If so, where?

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Submitted: 4 months ago.Category: Tax
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3/22/2018
Tax Professional: Lev, Tax Advisor replied 4 months ago
Lev
Lev, Tax Advisor
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Amounts you receive from them (other than policyholder dividends or premium refunds) are excludable in most cases from in-come as amounts received for personal injury or sickness. To claim an exclusion for payments made on a per diem or other periodic basis under a long-term care insurance contract, you must file Form 8853 with your return.

You will calculate exclusion amount using Per Diem values - that is regardless payments are calculated in different way.

Under this limit, the excludable amount for any period is figured by subtracting any reim-bursement received (through insurance or oth-erwise) for the cost of qualified long-term care services during the period from the larger of the following amounts.
The cost of qualified long-term care serv-ices during the period.
The dollar amount for the period ($360 per day for any period in 2017).

See Section C of Form 8853 and its instructions for more information.

https://www.irs.gov/pub/irs-pdf/f8853.pdf

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Customer reply replied 4 months ago
The 1099-Ltc is checked “reimbursed amount. I think that means it is not taxable. Correct? And how do I show that on the 1040?
Tax Professional: Lev, Tax Advisor replied 4 months ago

That might be not taxable - but that determination will be made on form 8853.

If you ignore that reporting - you will get IRS assessment letter.

You will report that income - calculate the excludable amount - and if payment is less than the excludable amount - none will be taxable.

That is very common situation.

So - on form 1040 - that amount will not be reported - but form 8853 will be attached with all these calculations.

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Tax Professional: Lev, Tax Advisor replied 3 months ago

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