1099 Ltc

[JON]

has the following information on it:
BOX 1 Gross Benefits Paid $7,982.49
BOX 2 Reimbursed Amount Y

Client had a stroke, wife is keeping him at home. Lots of expenses-is this an offset to the medical expenses on A? Not Taxable (reimbused expenses)? Or other???

[Bees Knees]

1099-LTC Instructions:

Box 1. Gross Long-Term Care Benefits Paid
Enter the gross long-term care benefits paid this year (other
than accelerated death benefits). These benefits are all
amounts paid out on a per diem (or other periodic) basis or on a
reimbursed basis. It includes amounts paid to the insured, to
the policyholder, and to third parties. You are not required to
determine whether any benefits are taxable or nontaxable.

Box 2. Accelerated Death Benefits Paid
Enter the gross accelerated death benefits paid under a life
insurance contract this year to or on behalf of an insured who
has been certified as terminally or chronically ill. Include the
amount paid by a viatical settlement provider for the sale or
assignment of the insured’s death benefit under a life insurance
contract.

[JON]

Correction to

original- it is not box 2 but box 3 reimbursed amount with a "Y" and I think it should be recorded as an offset to the expenses...????

[Bees Knees]

Box 3. Check if Per Diem or Reimbursed
Amount
Check a box to indicate whether the payments were made on a
per diem (or other periodic) basis or on a reimbursed basis. For
accelerated death benefits, do not check a box if you made
payments on behalf of a terminally ill person. Per diem basis
means payments made on any periodic basis without regard to
actual expenses. Reimbursed basis means payments made for
actual expenses incurred.

TTB, page 4-7 under Per Diem says, "If the long-term care insurance contract pays periodic payments for a chronically ill individual, any amount paid in excess of the per diem limit is taxable."

TTB, page 4-1 says the Per Diem limit per day for 2005 is $240.

So if the Per Diem box is checked, as long as the total Per Diem for the year comes out to be $240 or less per day, you don't have any tax consequence to the benefits paid.

If the reimbursed basis box is checked, you don't have any tax consequence because it is simply a reimbursement for actual expenses paid.

[JON]

Medical expenses

are listed by category and deduction taken. The reimburses portion, checks come straight to them, I offset to the expenses I am not going to try and match which ones are which.