Form 1099-LTC - Long-Term Care and Accelerated Death Benefits

To enter both the income and exclusion amounts for long-term care and accelerated death benefits in the TaxAct® program:

  1. From within your TaxAct return (Online or Desktop), click Federal (on smaller devices, click in the top left corner of your screen, then click Federal).
  2. Click the Other Adjustments dropdown, then click Archer MSAs and Long-Term Care Insurance Contracts.
  3. Click Long-term Care Contracts, and continue with the interview process to enter your information for Section C of Form 8853.

Note. If "No" is selected on the screen titled Long Term Care - Death Benefits, you will be provided with the screens to complete the rest of page two of Form 8853 Archer MSAs and Long-Term Care Insurance Contracts.

Usually these payments are reported to you on IRS Form 1099-LTC Long-Term Care and Accelerated Death Benefits.

Per IRS Publication 525 Taxable and Nontaxable Income, starting on page 24:

Accelerated Death Benefits

Certain amounts paid as accelerated death benefits under a life insurance contract or viatical settlement before the insured's death are excluded from income if the insured is terminally or chronically ill.

Viatical settlement. This is the sale or assignment of any part of the death benefit under a life insurance contract to a viatical settlement provider. A viatical settlement provider is a person who regularly engages in the business of buying or taking assignment of life insurance contracts on the lives of insured individuals who are terminally or chronically ill and who meets the requirements of section 101(g)(2)(B) of the Internal Revenue Code.

Exclusion for terminal illness. Exclusion for chronic illness. If the insured is a chronically ill individual who isn't terminally ill, accelerated death benefits paid on the basis of costs incurred for qualified long-term care services are fully excludable. Accelerated death benefits paid on a per diem or other periodic basis are excludable up to a limit. For 2022, this limit is $390. It applies to the total of the accelerated death benefits and any periodic payments received from long-term care insurance contracts. For information on the limit and the definitions of chronically ill individual, qualified long-term care services, and long-term care insurance contracts, see Long-Term Care Insurance Contracts under Sickness and Injury Benefits, earlier.

Exception. The exclusion doesn't apply to any amount paid to a person (other than the insured) who has an insurable interest in the life of the insured because the insured:

  • Is a director, officer, or employee of the person; or
  • Has a financial interest in the person's business.

Form 8853. To claim an exclusion for accelerated death benefits made on a per diem or other periodic basis, you must file Form 8853 with your return. You don't have to file Form 8853 to exclude accelerated death benefits paid on the basis of actual expenses incurred.

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