If client gives me 1099-R with a taxable amt in box 2 & has code 7D in box 7 & client says L-T care premiums are pd directly to insurance so NOT taxable, how do I report?

Forum|Forum|6 years ago
March 29, 2020
7 replies
58 views

The more I read about LTC insurance, the more confused I get. If this is non-taxable like client says, then why is the 1099-R even issued? The box for "taxable amount not determined" is blank. Client is elderly so I don't want to rattle her and say she's wrong. Help!

ProSeries Professional

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Best answer by rbynaker

I think maybe a call to the issuer of the 1099-R is in order. My guess is that the client is not properly understanding what this is. I have one client with one of these weird hybrid retirement/LTC policies, the LTC is reported on a 1099-R by itself in box 1 only, box 2a is $0, box 7 code W, box 8 "Other" equals box 1.

@Skylane , our local insurance expert, may be able to shed some light on this.

T

taxmanbrian

Level 4

This 1099-R appears to be an annuity payment from a private insurer and not an LTC payment. Chances are that the taxable amount is interest this person earned on the annuity investment. Your client should have received a 1099-LTC for the payment(s) she would have received from her LTC carrier. Depending on her receipt mechanism, she may need to search on the provider's website to pull that information versus receiving it in a paper medium.

rbynakerAnswer

Level 13

I think maybe a call to the issuer of the 1099-R is in order. My guess is that the client is not properly understanding what this is. I have one client with one of these weird hybrid retirement/LTC policies, the LTC is reported on a 1099-R by itself in box 1 only, box 2a is $0, box 7 code W, box 8 "Other" equals box 1.

@Skylane , our local insurance expert, may be able to shed some light on this.

T

taxmanbrian

Level 4

I personally have not seen any of these but rbynaker makes a very good point in contacting the issuer for clarification. My response was based on the point that she noted that 7D was showing in box 7.

rbynaker

Level 13

@taxmanbrian wrote:
I personally have not seen any of these but rbynaker makes a very good point in contacting the issuer for clarification. My response was based on the point that she noted that 7D was showing in box 7.

I suspect there's more than one policy at work here (although it wouldn't be the first time I've seen an incorrect 1099). Three-way call with the agent should clear things up pretty easily and get everyone on the same page.

Rick

PS: Thanks, Bruce, for chiming in so quickly.

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