Form 1099-LTC

[Lion EA]

My first Form 1099-LTC. Reimbursed amount checked. Qualified contract checked. Cover letter states NOT taxable, but REPORTED to IRS.

Do I leave it off return? Will client get a letter. She's in hospice, and her daughter has POA and wants this done now.

Is there a way I should or could report, and then back it out, to ward of a future IRS letter, a CP-2000 or whichever?

[BrewOne]

you need to fill out and include Form 8853 (page 2)--not usually taxable

[Lion EA]

I really struggled to fill out Form 8853 from this 1099-LTC. Do you prepare many? I made it work, but feel like I'm repeating one number on two lines. It's the Reimbursement type and NOT the Per Diem.

If you have the time, because it's reimbursing for actual qualified medical cost, I have...

Line 22 showing the costs to match the Box 1 reimbursements

Line 24 also showing the reimbursements

It feels wrong, but gives Line 26 as $0 taxable payments.

[Margaret CPA in OH]

The client I currently have with this situation incurs significantly higher expenses for qualified LTC services.  Not all is reimbursed.  The excess expenses that were not reimbursed were carried to Schedule A and listed as unreimbursed ltc expenses.  the past two years have put this client well over the standard deduction.

[Lion EA]

This client gave me very little that was not reimbursed, at least per the documents she gave me. So, I put her dentist or some drugs on Schedule A. I made the assumption that her other (undocumented) costs reported to her LTC insurer matched what they reimbursed her. The cover letter states, "All benefits paid to reimburse you for such expenses are non-taxable."

Should I NOT file Form 8853 since none of her benefits are taxable? I don't want to risk a matching letter.

[Lee B]

See Section C  -  Instructions for Form 8853   https://www.irs.gov/instructions/i8853#en_US_2023_publink24188ld0e1652

[Lion EA]

Thank you all. I know I'm tired and confused. I read the instructions plus the instructions in my software. From the instructions:

Who Must File

You must file Form 8853 if any of the following applies...

You (or your spouse, if filing jointly) were a policyholder who received payments under an LTC insurance contract or received any accelerated death benefits from a life insurance policy on a per diem or other periodic basis in 2023. See the instructions for Section C , later.

Filing Requirements for Section C

Were any of those payments made under a qualified LTC insurance contract?

Yes

Complete all of Section C

From my software:

Total Reimbursements Received For Qualified LTC Services

Enter the reimbursements received, or that are expected to be received, through insurance or otherwise for qualified LTC services provided for the insured for each LTC period during 2023.

These amounts should be shown in Boxes 1 and 2 of IRS Form 1099-LTC if Box 3 "Reimbursed amount" is checked.

This entry carries to Form 8853, Section C

My client's contract is Reimbursed Amount and NOT Per Diem, but I had to enter 365 days to make the math work.