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Lane, What needs to be done with form 1099-LTC if there is…

Lane,What needs to be done...
Lane,What needs to be done with form 1099-LTC if there is an amount in box 1?
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3/28/2018
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 14,678
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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You'll need to find out (insurance Co and tell you) whether this is a qualified contract or not.

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If Box 3 is marked "Reimbursed Amount" and the policy is categorized as a Tax Qualified Contract, then the amount of money received can generally be excluded from the income being reported. The insurance company can tell you if your policy is considered a Tax Qualified policy.

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If Box 3 is marked "Reimbursed Amount" and you have a Non-Tax Qualified Contract, then some or all of your benefits may be taxable. Again, the insurance company can tell you if your policy is considered a Non-Tax Qualified policy.

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If Box 3 is marked "Per Diem" (which will happen for policies that are considered Indemnity policies) then the amount you may exclude from taxable income being reported is limited. (by am amount published yearly by IRS

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Customer reply replied 3 months ago
Box 1 is 6,710 and box 4 is not checked off so its not a qualified contract.
Customer reply replied 3 months ago
Box 3 is also marked Reimbursed

OK, you'll need to calculate the amount that's taxable ... let me pull that up for you

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This is all done on form 8853

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To calculate whether any long-term care benefits are taxable, start by adding up the total cost of all covered medical and personal care expenses during the payment period.

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If benefits are paid monthly, total the expenses for the month. If they're paid weekly, total the weekly expenses and so on. From that total, subtract any amounts reimbursed by health insurance or Medicare. Call the result "amount A."

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Then multiply the number of days in the payment period by the daily exclusion rate set by the IRS. ($360 per day for any period in 2017)

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.Call that "amount B." Subtract whichever amount is larger, A or B, from the benefits paid for the period. Anything left over is taxable income.

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Again, IRS Form 8853 walks through these calculations.

Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 14,678
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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