What is Form 1099-LTC?
Form 1099-LTC is used to report any long-term care benefits, including accelerated death benefits. Payers may include companies, governmental units, and viatical settlement providers during a particular tax year. Insurance companies that pay long-term care insurance benefits or life insurance under an accelerated death benefits clause are required by the IRS to provide the filers with Form 1099-LTC that reports the tax payments made. Payments that are from long-term care insurance contracts are generally excludable as taxable income.
A viatical settlement provider is an individual (or company) that pays the same kind of benefits to a person in exchange for being named the beneficiary of that person’s life insurance policy.
“Long-term care benefits” May indicate:
- Any payments made under a product that is advertised, marketed, or offered as long-term care insurance (whether qualified or not);
- Accelerated death benefits (excludable in whole or in part from gross income under section 101(g)) paid under a life insurance contract or paid by a viatical settlement provider.
1099-LTC forms must be mailed to recipients by February 15 and e-filed with the IRS by March 31 each year.
How to File IRS Form 1099-LTC?
To claim an exclusion for accelerated death benefits made on a per diem or other periodic basis, the filer must file Form 8853 with their return. The filer does not have to file Form 8853 to exclude accelerated death benefits paid on the basis of actual expenses incurred.
- Box 1: Gross long-term care benefits paid
- Box 2: Accelerated death benefits paid
- Box 3: Per Diem or Reimbursed amount
- Box 4: Qualified contract
- Box 5: Certified chronically ill or terminally ill with date certified
Policyholder – Individuals own the contract, including the owner of a contract sold or assigned to a viatical settlement provider.
Per Diem Basis—Payments made periodically without regard the actual expenses incurred during the period.
Accelerated Death Benefits—Fully excludable from your income if the insured has been certified by a physician as terminally ill.
Who can use Form 1099-LTC?
Common payers who need to file the Form 1099-LTC
- Payers of long-term and accelerated death benefits
- Insurance companies
- Governmental units
- Viatical settlement providers
Providers engage in purchasing or taking the assignment of insurance contracts on the lives of terminally or chronically ill individuals, and are licensed in the state to insure lives. However, if a doctor has declared the beneficiary to be terminally ill or likely to die from the condition within two years (24 month) —the accelerated death benefits are not taxable with no limitations. There are three copies of the forms: one copy for the IRS, one for the Policyholder and one for the insured.
When is the Form 1099-LTC deadline?
|IRS Paper Filing
|IRS Electronic Filing
Note: If the due date/deadline falls on a Saturday, Sunday, or public holidays, The filler may need to E-file on the next business day.
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