How to report Form 1099-LTC (Long-Term Care Benefits) with per diem box checked on tax return?

I'm totally confused about how to handle a Form 1099-LTC on my mom's tax return. She received long-term care benefits last year, and the insurance company sent her a 1099-LTC with Box 3 (per diem) checked. The form shows $180K in Box 1 for benefits paid, but her actual medical expenses were only about $126K. Do we need to report the difference ($54K) as taxable income? I've looked through TurboTax and read some IRS publications but still can't figure out the right way to handle this. Has anyone dealt with this specific situation before? The form is pretty straightforward but the tax implications aren't clear to me at all. I want to make sure we're reporting this correctly and not overpaying taxes if this amount isn't actually taxable. Any help would be really appreciated!

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18 comments

Miguel Ramos

•8M

Yes, this can definitely be confusing! With a 1099-LTC where Box 3 (per diem) is checked, you need to compare the per diem payments to what's called the "excludable limit" to determine taxability. First, calculate the excludable amount: multiply the daily rate set by the IRS ($390 for 2024) by the number of days your mom qualified for care. Then compare this to her actual costs ($126K). The excludable amount is the GREATER of either her actual costs or the calculated per diem limit. If the benefits received ($180K) exceed this excludable amount, then yes, the difference would be taxable. You'll need to complete Form 8853 (Archer MSAs and Long-Term Care Insurance Contracts) to calculate the taxable portion and include it with her return. The taxable amount will carry over to Schedule 1. Hope this helps clarify things for you!

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Miguel Ramos

•8M

You only multiply the daily rate by the number of days she qualified for and received care. So if she began in March, you would count from March through the end of the year (or whenever the care ended if it wasn't year-end). For example, if she started March 1st and received care for the rest of the year, that would be approximately 306 days. You'd multiply 306 × $390 = $119,340 for the per diem limit. Then compare that to her actual costs of $126K, and use the higher amount ($126K) as the excludable amount. Then subtract that from the $180K benefit to determine the taxable portion.

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StarSailor

•8M

I went through this exact same issue last year with my father's LTC benefits. I was getting nowhere with figuring out the tax implications until I found this AI tool that analyzes tax forms and explains exactly what to do with them. It's called taxr.ai (https://taxr.ai) and honestly it saved me hours of research. I uploaded my dad's 1099-LTC and it immediately broke down how to handle the per diem calculation, which Schedule and Form to use, and how to calculate the taxable vs non-taxable portions. It also explained the IRS daily rate limit calculation which was the part I kept getting wrong. The most helpful thing was that it showed me exactly where to enter everything in TurboTax, which none of the generic tax advice articles mentioned.

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StarSailor

•8M

It provides both general instructions and specific guidance for major tax software like TurboTax, H&R Block, and TaxAct. I used TurboTax, but it had specific section references for H&R Block too, so you should be good. It tells you exactly which screens to look for. Regarding accuracy, I actually had my dad's accountant review everything after I used the tool, and he confirmed it was all correct. He was actually impressed and said he might recommend it to other clients with complicated forms like the 1099-LTC. The tool specifically references IRS publications and even includes the publication numbers so you can double-check everything.

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Connor O'Brien

•8M

I just wanted to follow up - I tried that taxr.ai site that was recommended and it was actually super helpful. I uploaded my mom's 1099-LTC and it gave me step-by-step instructions for H&R Block, exactly like I needed. It confirmed what the first commenter said about calculating the per diem limit vs actual expenses, but it also pointed out something I missed - we needed to account for some additional qualified expenses that weren't part of the billed care costs. This reduced the taxable portion by about $8K! It also gave me a breakdown of which parts of Form 8853 to fill out and exactly where these numbers need to go on the tax return. Definitely worth checking out if you're dealing with these forms.

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Keisha Johnson

•8M

If you've been struggling to get answers from the IRS about this 1099-LTC situation, you might want to check out Claimyr (https://claimyr.com). I was stuck on a similar tax issue with my mom's long-term care benefits and couldn't get through to the IRS for weeks. Claimyr got me connected to an actual IRS agent in about 15 minutes when I had previously been trying for days. The agent was able to confirm exactly how to handle the per diem calculation and what parts of the benefit were taxable. They have a video showing how it works: https://youtu.be/_kiP6q8DX5c It was especially helpful because my mom's situation was slightly different from what the publications described, and I needed to confirm the right approach directly with the IRS.

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Keisha Johnson

•8M

They use a system that continuously calls the IRS and navigates the phone tree for you. When they reach a human agent, they call you and connect you directly to that agent. You don't have to sit on hold or deal with the automated menus at all. Yes, it actually works! I was skeptical too, but I was desperate after spending hours on hold over multiple days. They called me back in about 15 minutes with an IRS agent on the line. The agent was able to look up my mom's account and confirm the correct way to report the 1099-LTC with the per diem box checked.

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QuantumQuest

•8M

I need to eat my words about being skeptical of Claimyr. After posting my reply yesterday, I decided to try it since I was at my wit's end with trying to reach the IRS about my mom's 1099-R issue. The service got me connected to an IRS representative in about 20 minutes. I explained my situation with my mom's long-term care benefits and the per diem calculation confusion, and the agent walked me through exactly how to fill out Form 8853 and which amounts were taxable. For anyone else dealing with these complex tax forms like 1099-LTC, being able to speak directly with the IRS and get clarification made a huge difference. I've been trying to reach them for weeks and this saved me so much time and frustration.

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Amina Sy

•8M

Just to add another perspective - my wife and I dealt with this last year for her aunt. We found that if your qualified long-term care expenses exceed the total benefits paid (the amount in Box 1), then none of the benefits are taxable, regardless of the per diem checkbox. In your case, since the benefits ($180K) exceed the expenses ($126K), you do need to calculate the taxable portion, but don't forget to include ALL qualified long-term care expenses, not just the obvious ones. Things like modifications to the home for accessibility, certain transportation costs to medical facilities, and some prescription costs can sometimes be included.

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Amina Sy

•8M

Yes, IRS Publication 502 has a pretty comprehensive list of medical expenses that qualify. For long-term care specifically, you want to look at the sections on home modifications and long-term care services. Generally, home modifications can count if they're medically necessary and don't add to the property value (like grab bars, ramps, widening doorways). Transportation costs to and from medical appointments definitely count. Also, don't forget about any supplemental care that wasn't covered by insurance but was prescribed by a doctor, like physical therapy sessions or certain medical equipment. Keep good records of all these expenses with receipts. Adding these additional expenses might significantly reduce the taxable portion of the LTC benefits.

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