Vic Dura wrote:

- quote -

Don't matter what you call the money, "reimbursements",
"payments", still it's coming in and reported on the form
and must be accounted for. Since deductions were taken
previously, it's income unless offset by actual expenses to
the LTC facility.

IOW, you don't get something for nothing. No such thing as
a free lunch.

ChEAr$,
Harlan

<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ------------------------------------------------------- >

I have a question regarding if Long Term Care (LTC)
insurance payments received by a Tax Payer (TP) must be used
to offset Schedule-A LTC medical expenses. I posed this
question in another tax related group but would also like to
get the opinions of the experts in this NG.

A CPA I'm dealing with says that the LTC payments are
neither reportable as income (per Form 8853) nor required to
be used to offset medical expenses. I agree with the "not
reportable as income" part but have doubts about the medical
expenses offset part.

The CPA is saying that the LTC payments of $100/day from the
insurance company are like a disability insurance payout She
says this because

1) the insurance payments are reported on a 1099-LTC

2) the payout would be $100/day regardless of the actual
cost of the LTC. Even if the cost was less than $100/day
(not likely) payout would still be the same. The only
requirement is the that the insured be in a LTC facility.

The CPA further posits that IRS regs do not say anywhere
that LTC insurance *payments* (as opposed to
*reimbursements*) must be used to offset LTC expenses.

The premiums were paid with "before" tax dollars i.e. the
premiums were listed in Sch-A as medical insurance expenses.
However, since the policy began paying, payment of premiums
was suspended and no longer are required.

Does the CPA's position have any merit? It seems very
aggressive to me so I would like to get a few more opinions
on this.

Thanks for any comments.

--
To email me directly, remove CLUTTER.

<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ------------------------------------------------------- >