I have been working on taxes and it seems too complicated. We got a 1099LTC form which shows how much the long term care insurance has paid out over the year. Turbo Tax asks how much was the cost of the care? I guess you enter the same amount that they paid out. But actually I had to pay out of pocket for 60 days of care that they did not reimburse. I wonder if I should put down that the cost of care was more than they paid? Or do I claim it on another part of the return. They make it so difficult. I also saw a tax credit for being disabled, I was not sure how to take advantage of that .
Time for a CPA...I have an appt next week and these are good questions. I would bet you report what the LTC paid out and with regard to what you paid out it would go toward the medical part of your claim for meds, etc..
Having some of the same problems, moorsb. I agree with Mimi about the amount you paid out of pocket......listed as medical expenses. As far as the tax credit for the disabled, it is based somewhat on age and much on total income.
Your medical would go under medical expenses. You report the 1099 in its spot. As for disabled, I am not sure you will get a benefit from that. When I clicked on disabled, it never came up again. Could be cause our income was too low to matter. If you do not want to take it to someone to do (and there is no guarantee they will do it correct), google your questions and research.
I just searched for this. I need help, and maybe some can answer this. I was really surprised that I got the 1099LTC. I didn't know they did that. Do you pay taxes on money the insurance company paid for care. This is all so confusing. Then I read that you do pay if the daily rate was more than the FED set up. I am looking at placing DH. Now concerned I will pay taxes. I paid 100% of premiums for this policy. Really need help. This year was just one day a week in home care. Really confused. I had a amount in box one and none in box 3 on 1099
Best would go to a tax man. But, if I remember correctly LTC premiums are deductible along with medical expenses. That should more than offset the payments.
This is one statement I found.
Long Term Care Insurance Long term care insurance is actually considered a type of health insurance, which allows policy owners with eligible contracts to deduct a portion of their premium payments. Benefits received under a tax-qualified long term care insurance plan are usually not considered income. If you don't own a tax-qualified policy, you cannot deduct premiums paid for the coverage. Payouts under both types of plans remain income tax-free provided the benefits you receive are not more than the cost of care. The Texas Department of Insurance warns that taxes may be due on benefits received in excess of the cost of c
Charolette I did use the premiums on my taxes as medical insurance payments. But fortunately or unfortunately our standard deduction is more than our itemized. And your medical and all has to be 13% of income to count. I think that turbo tax is very co fusing the language they use is not for the average person. I will seek out tax advise. I have to make sure about the funds disbursed when I place DH. It will be a great amount. I am paying some of the balance for In home care. They have an administrative charge and milage that LTC doesn't pay for.
I switched to using an accountant for my taxes after my wife moved into an ALF. The tax forms weren't more complicated but I needed advice. And in case the IRS disagreed with my filing damages would be limited to taxes and interest but no penalties unless I mislead my accountant.
My accountant told me the documentation I needed in order to deducts ALF costs from taxes (a letter from her neurologist stating that she has a terminal disease and needs to be in LTC for her own protection).
Unfortunately he never discovered any secret ways to lower my tax bill.
I've been through this recently and will share what my accountant told me. My advice because every situation is different, see a accountant. Medical expenses are deductible for that portion that exceeds 10% of your gross adjusted income if you and/or your spouse is under 65. 7.5% if age 65 or over. Of course you have to file a 1040 and itemized deductions.
Regarding the LTC 1099. You add up your total of medical expenses (vision, dental, hospitals, doctors, prescriptions, incontinence supplies, etc. see IRS publication 502) and deduct the amount on the LTC 1099 from the total. The balance is what you can deduct on your taxes. In my way of thinking, it's basically what you paid out of pocket and were not reimbursed for.
For example, the cost of in-homecare is $200/day and the LTC policy reimburses $100/day. You claim the $100 you paid out of pocket as a medical deduction on your taxes.
My accountant advised me that I should have a letter from my husband's doctor stating that he has a terminal disease and requires live-in care for his own safety and for mine. This is important should the IRS challenge the medical deductions.