LONG TERM CARE CONTRACT - 1099-LTC

[Yardley CPA]

Does anyone have experience with form 1099-LTC?   Client, H&W, MFJ.  Wife has Dementia and husband, along with a caregiver, tend to the wife's needs.  They live at home.  Wife received a 1099-LTC from their Long Term Care insurance company.  

• There is an amount in Box 1.  
• Reimbursed Amount has an X next to it.  
• Taxpayer has indicted all funds received were reimbursement of expenses.  
• This would be entered on the 2nd page of Form 8853, correct?  
• On line 17 place the proceeds and on line 22 place the same amount as costs incurred.  It results in none of the proceeds being taxable.  Is my understanding correct?

 

[Pacun]

It seems that all money was spent on care so no taxes. But I am just bumping your question up so others can answer it.

[jklcpa]

On 2/22/2017 at 7:26 PM, Yardley CPA said:

Does anyone have experience with form 1099-LTC?   Client, H&W, MFJ.  Wife has Dementia and husband, along with a caregiver, tend to the wife's needs.  They live at home.  Wife received a 1099-LTC from their Long Term Care insurance company.  

• There is an amount in Box 1.  
• Reimbursed Amount has an X next to it.  
• Taxpayer has indicted all funds received were reimbursement of expenses.  
• This would be entered on the 2nd page of Form 8853, correct?  
• On line 17 place the proceeds and on line 22 place the same amount as costs incurred.  It results in none of the proceeds being taxable.  Is my understanding correct?

 

 

Yes, it is reported on pg 2 of 8853. If it isn't paid on a per diem or other periodic basis, I think it goes on line 24 instead, but check the instructions for this line. It depends on when the contract was written.  Enter the actual expenses on line 22 which are probably more than the reimbursement. At least in the case of the last one of these I did, my client had expenses that exceeded the amount received, and unlike yours,  my client's form had the per diem box checked.

[Yardley CPA]

Thank you both.  Appreciate your input.