Do I have to report long-term care benefits on my tax return?
Asked by: Jalon Koepp | Last update: December 11, 2025Score: 4.5/5 (13 votes)
Why did I get a 1099 LTC?
If you've received a 1099-LTC tax form this tax year, it's likely because you were paid long-term care benefits or accelerated death benefits, and the Internal Revenue Service (IRS) wants to know about it. While these benefits aren't always taxable, it's important to understand what this form means.
Can long-term care insurance be deducted from taxes?
You may be eligible to deduct qualified long-term care expenses that exceed 7.5% of your AGI. Qualified expenses include any expenses to treat, cure, or improve any type of health condition. This includes the inability to care for yourself. Long-term care insurance premiums fall on the list of IRS-approved expenses.
Are refunds of long term care premiums taxable?
Long-term care insurance premiums could also have been paid tax-free through an HSA. The short answer is that the premium refund will only be taxable if you previously received a tax benefit from paying the premiums, such as taking one of the possible tax deductions or paying the premiums with tax free money.
Do you report 1099-LTC on tax return TurboTax?
You can enter your 1099-LTC and determine if any of the Long Term Care payments you received are taxable in any version of TurboTax other than the Online Free version. You'll receive Form 1099-LTC if you get money from long-term insurance or life insurance under an accelerated death benefits clause.
Tax Credits & Deductions for Caregivers
Is a 1099 long-term care taxable income?
If the policy only pays benefits that reimburse you for qualified long term care expenses you will not owe federal income tax on these benefits. 2. 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.
Where do I enter long-term care in TurboTax?
- Open or continue your return.
- Navigate to the Schedule A section: ...
- Proceed through the medical expenses section and go past the Tell us about anything paid for long-term care services screen.
Where does long-term care go on tax return?
Qualified long-term care premiums up to the amounts shown below can be included as medical expenses on Schedule A (Form 1040), Itemized Deductions, or in calculating the self-employed health insurance deduction.
What is the return of premium for long-term care?
Return of Premium (ROP) is a feature on many hybrid long-term care insurance (LTC) policies that refunds your premiums—fully or partially—if you never end up needing long-term care. At first glance, this added protection seems like the perfect way to ensure your premiums don't go to waste.
Are health insurance premium refunds taxable?
For individual market consumers who purchased their coverage with after‐tax dollars, a rebate is not taxable income. However, if an individual deducted the prior year's premium payments on their Form 1040 Schedule A, then their MLR rebate is subject to federal income tax.
Is it worth claiming medical expenses on taxes?
The medical expense deduction covers a wide variety of expenses. However, because of the high Standard Deduction and the 7.5% of AGI threshold requirement, it can be difficult to benefit unless you have a lot of out-of-pocket costs.
What are the gross long-term care premiums?
Gross long-term care premiums are the total amount you paid for a long-term care policy. Gross long-term care premiums can come into account when doing your annual taxes. If you have a qualified long-term care policy, then you can deduct part or all of your gross long-term care premiums as a healthcare expense.
Can you deduct health insurance premiums without itemizing?
Whether you can deduct health insurance premiums from your tax return also depends on a few factors. First, you'll only be able to deduct premiums as medical expenses if you itemize deductions on your tax return, but not if you take the standard deduction. See more details at the bottom of this section.
How to report long-term care benefits?
Tax-qualified Long-Term Care Insurance benefits come to you tax-free. Insurance companies that pay long-term care insurance benefits are required by the Internal Revenue Service (IRS) to provide claimants with a 1099 LTC. This form is used to report the payments made under a long-term care insurance contract.
Where do you report long-term care benefits on 1040?
Long-Term Care Benefits
The taxable portion of the benefits received can be calculated using Form 8853. The taxable portion calculated from the form will then need to be entered on line 21 of the Form 1040 when the yearly tax return is filed.
Are LTC benefits tax-deductible?
Deduction Individuals are allowed an itemized deduction for qualified long term care insurance contract to the extent that the amount does not exceed specified limitations. These amounts are indexed. Businesses, whether incorporated or not, may deduct LTC insurance as reasonable compensation expenses.
What is the biggest drawback of long-term care insurance?
One of the biggest drawbacks of getting long-term care insurance is the risk of losing all the premiums you have paid over the years. If you end up not needing long-term care services, you won't be eligible for coverage. This means the money you've spent for coverage goes down the drain.
Do you get money back when you cancel long-term care insurance?
The only way to get back what you paid for but didn't use is with a long-term care insurance hybrid policy. This is a life policy with a long-term care benefit rider, and most of the time you can cancel and get back the amount that was paid into the policy.
Do you pay taxes on return of premium life insurance?
Key Takeaways
They offer both a death benefit and a savings component. ROP policies have higher premiums than standard term life insurance. The refund you receive is typically tax-free. It's important to compare quotes and consider your individual needs before purchasing.
Are long-term care benefits taxable in the IRS?
"Generally, benefits received from a tax-qualified long-term care insurance policy are not considered taxable income. This means that if you have a policy that meets the criteria set by the Internal Revenue Service (IRS), the benefits you receive from that policy are typically tax-free."
Where do you enter 1099-LTC on TurboTax?
Go to Income, then scroll to the bottom of the section to find Less Common Income. Scroll down to Miscellaneous Income, 1099-A, 1099-C and click Start or Update. Scroll down to Long-term care account distributions (Form 1099-LTC) and click Start or Update.
What is the $5000 caregiver tax credit?
The Credit for Caring Act would help working family caregivers offset the cost of some caregiving expenses such as a home care aide, adult day services, home modifications, assistive technology, respite care, transportation, or other supports that help them and their loved ones.
How does 1099-LTC affect my taxes?
Providers of Form 1099-LTC are typically insurance companies or governmental units, among others. Payments reported include those made directly to you, to the insured, or to third parties. Your 1099-LTC may list a large amount in benefits for which you may not necessarily owe taxes.
Are long-term care premiums tax deductible in 2024?
For 2024, individuals over the age of 70 can deduct up to $5,880 in long-term care premiums. To be considered qualified, these policies must adhere to the guidelines established by the Health Insurance Portability and Accountability Act (HIPAA) of 1996.
What states are considering long-term care tax?
States Considering a Long-Term Care Tax
Here's a partial list of other states considering similar laws: Alaska, Colorado, Hawaii, Illinois, Maine, Michigan, Minnesota, Missouri, Montana, North Carolina, Oregon and Utah.