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1099R

I am getting my mothers taxes ready to be done.This year she got a 1099 R distribution code 7 from First Penn Life insurance for $40,123.00 I know I have to report this as income for her.She is in a nursing home,chronically ill.The insurance policy is a universal life insurance with a rider that prepays the death benefits for long term care. This policy my dad bought for $100,000.00 in 1998. The nursing home bill this year was $50,500.00 The insurance company paid $51,000.00 form1099LTC Reimbursed amount. My question is can she deduct the nursing home bill if she itemize her taxes ,her other income $12,000 ss $4.000 pension.         I called the tax help line, talked to 5 different people no answer.I called First Penn, they said talk to an accountant they don't give tax advice. My taxes person is not itemizing her taxes to deduct the nursing home bill should she? I hate the idea of my mother having to pay $6000.oo more taxes on the $40,000.oo 1099R     Any help would be appreciated. Thank you for taking the time to read this .     Thank you very much        Alan

Reply to
ALHAVERLAND
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says

Insurance Reimbursement

You must reduce your total medical expenses for the year by all reimbursements for medical expenses that you receive from insurance or other sources during the year. This includes payments from Medicare.

Even if a policy provides reimbursement only for certain specific medical expenses, you must use amounts you receive from that policy to reduce your total medical expenses, including those it does not provide reimbursement for.

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In addition, the bill was $50,500 but insurance paid $51,000. That leaves $500 of Other Income to report.

Reply to
removeps-groups

She does not deduct the nursing home bill. However, only $500 of the insurance payout is taxable income (which is why she doesn't deduct the bill).

Was that $40,000 or $51,000? If the total payment was $91,000, then the $40,000 is taxable (perhaps only in part if some is return of cost), and a total tax bill around $6000 seems correct.

Seth

Reply to
Seth

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