This guide covers tax year 2026, the return filed in 2027. The IRS had final 2025 forms and 2026 drafts available when this was written, so check each line number against the final 2026 forms before filing. Where a figure comes from a 2025 final form, we say so.
Form 1040 is a U.S. federal return. If you live in Australia but have U.S. filing obligations, treat this as U.S. reporting guidance and assess any ATO requirements separately.
Key Takeaways
- Form 1099-LTC supplies data to Form 8853; Schedule 1 carries any taxable amount to Form 1040.
- A Form 1099-LTC does not make the full amount taxable.
- Tax treatment depends on payment type, per diem vs reimbursement, contract status and illness certification.
- Keep the form, care-expense records, certifications and any corrected forms.
What Form 1099-LTC Reports
What the form is and who issues it
Form 1099-LTC, Long Term Care and Accelerated Death Benefits, reports payments from long-term care insurance contracts and accelerated death benefits. Issuers include insurers, governmental units and viatical settlement providers.
It is an information return. The payer sends it to you and the IRS, but payers don't determine taxability. Gross benefits are not necessarily taxable.
Key boxes and who uses the form
Based on the April 2025 revision, review these boxes:
| Box | What it shows |
|---|---|
| 1 | Gross long-term care benefits paid, including third-party payments |
| 2 | Accelerated death benefits paid, including qualifying viatical payments |
| 3 | Check if per diem or reimbursed amount |
| 4 | Qualified contract (optional) |
| 5 | Chronically or terminally ill (optional), with latest certification date |
Box labels can change, so match them against the current-year form.
The policyholder and the insured person can be different people:
- Copy B goes to the policyholder, even when payment goes to the insured or a care provider
- Copy C goes to the insured and is informational
- Return reporting belongs to the policyholder
Where to Report Form 1099-LTC on Form 1040
The short answer: Form 8853 before Form 1040
Don't copy Box 1 or Box 2 onto Form 1040 as ordinary income. Enter the details in Form 8853, Section C, Long-Term Care (LTC) Insurance Contracts.
On the 2025 final form, line 26 carries the taxable amount to Schedule 1, line 8e. The 2026 drafts show Schedule 1 line 10 flowing to Form 1040, line 8. Confirm both on the final 2026 forms.
Step-by-step reporting path
- Review the form. Note the payment type, per diem or reimbursed status, and illness information.
- Complete Section C of Form 8853. Answer the contract, payment and illness questions.
- Calculate the limitation. Form 8853 works out any includible amount.
- Transfer the result. Line 26 goes to the Schedule 1 additional-income line.
- Carry the Schedule 1 total to Form 1040. Use the line the 2026 instructions specify.
Don't rely on older guides that point to obsolete Form 1040 lines.
Paper returns, tax software and e-filing
Tax software often files Form 1099-LTC under long-term care or Archer MSA sections, not a generic "1099 income" menu. For example, TaxAct's guidance points to Income > Explore More > Long-Term Care Insurance Distributions.
ProSeries has no dedicated 1099-LTC worksheet and uses page 2 of Form 8853. Navigation varies by product and year.
How you file also changes the checklist:
- Paper: Attach Form 8853 to your Form 1040, 1040-SR or 1040-NR. If several people received benefits, include an aggregate statement.
- E-file: Confirm Form 8853 is in the submission before you transmit.
- IRS Free File Fillable Forms: Handles only one Section C page, so it can't e-file if your spouse also needs Section C.
How to Determine the Taxable Portion
Start with the type of payment
The calculation turns on what was paid and why. Here is how the IRS treats each category:
| Benefit category | Treatment |
|---|---|
| Qualified LTC benefits | Generally excluded; periodic payments have a limit |
| Accelerated benefits, terminally ill insured | Fully excludable under the stated rules |
| Accelerated benefits, chronically ill, based on actual qualified costs | Fully excludable; no Form 8853 needed |
| Accelerated benefits, chronically ill, periodic | Limited exclusion, combined with periodic LTC payments |
Never assume all benefits are tax-free, or that all reported benefits are taxable.
Per diem benefits
Per diem payments are fixed or periodic amounts not tied to your actual care costs. The daily limitation is $430 for 2026 and $420 for 2025, under Rev. Proc. 2025-32 and its predecessor.
The exclusion limit is the larger of your qualified care costs or the daily rate times days in the care period, less reimbursements. Taxable payments can't fall below zero.
Reimbursement benefits
Reimbursements are tied to qualified long-term care expenses you actually incurred. Those reimbursements also reduce the limitation on periodic payments. Keep supporting records on hand:
- Invoices and payment records
- Care-provider statements
- The practitioner's care plan
Accelerated death benefits and illness certification
- Terminally ill: A physician certifies the illness is reasonably expected to result in death within 24 months.
- Chronically ill: A licensed practitioner certifies, within the previous 12 months, that the person can't perform at least two activities of daily living for at least 90 days, or needs substantial supervision due to severe cognitive impairment.
Box 5 helps, but it doesn't settle every question. Incomplete certification is a reason for professional review.
Qualified versus nonqualified contracts
Qualified contracts need qualified-services-only coverage, guaranteed renewability and no cash surrender value, among other conditions. Check the policy itself, not just Box 4.
Get professional review for:
- Nonqualified policies
- Viatical settlements
- Multiple recipients sharing a limitation
- Payments made for another person
- Missing illness certification
How Form 8853 Connects to Form 1040
Gather your information first
- Form 1099-LTC and the policy or contract details
- Dates and amounts of payments
- Qualified-care expense records and reimbursements
- Illness certification
- Whether you were the policyholder, the insured or another recipient
Reconcile the form against your own records. If the gross amount, recipient or classification looks wrong, contact the payer.
Completing Section C
On the 2026 draft Form 8853, Section C runs as follows:
- Lines 14a-16: insured's name and SSN, other recipients, terminal-illness status
- Lines 17-19: gross periodic benefits, qualified-contract portion, periodic accelerated benefits
- Line 20: sum of lines 18 and 19
- Lines 21-23: $430 times care-period days, qualified costs, then the larger of the two
- Lines 24-25: reimbursements, subtracted to find the limitation
- Line 26: line 20 minus line 25, floored at zero
Enter the 1099-LTC amounts accurately, but don't treat the gross figure as the taxable amount.
When no taxable amount results
A zero result doesn't always mean no form. Publication 525 says: "To claim an exclusion for payments made on a per diem or other periodic basis under a long-term care insurance contract, you must file Form 8853 with your return."
Expense-based accelerated-benefit exclusions are the exception. Don't skip a required form because the benefits look tax-free, and don't report gross benefits as income without the analysis.
A filing example from the IRS
The 2025 Form 8853 instructions give an example. Alex receives $24,000, incurs $54,750 in qualified costs and receives $27,375 in reimbursements.
Using a full-year benefit period, line 21 is $153,300 ($420 x 365), line 23 is $153,300, and line 25 is $125,925. Line 26 is $0.
So the 1099-LTC shows $24,000, Form 8853 analyses it, and nothing reaches Form 1040. That is one published example, not personal tax advice.
Common Errors, Records and When to Get Help
Mistakes to avoid
- Entering the full gross benefit directly on Form 1040
- Confusing Form 1099-LTC with other 1099 forms
- Using an outdated Form 1040 line number
- Overlooking Form 8853
- Confusing the policyholder with the insured
Missing, incorrect or duplicate forms
Contact the payer first and keep your correspondence. Payers correct errors under the rules in Publication 1099. Form 4852 substitutes for W-2 and 1099-R, not 1099-LTC, so it will not fix a missing or incorrect Form 1099-LTC.
If you are outside the United States, the IRS international line is 267-941-1000 (not toll-free).
Records
Keep supporting records through the limitations period. Under IRS retention guidance, that is ordinarily three years, and six years if you omitted more than 25% of reported gross income.
Getting help
Australian-based taxpayers, international individuals and businesses with U.S. filing obligations can have complex Form 1099-LTC issues. VJM Global's U.S.-compliant tax professionals help with U.S. tax compliance, including Form 1040 and 1040-NR preparation. This article doesn't replace individual advice, and outcomes depend on your facts.
Frequently Asked Questions
How do I report Form 1099-LTC on my Form 1040?
Use it to complete Section C of Form 8853. Any taxable result then flows through Schedule 1 to Form 1040.
Where does 1099 income go on Form 1040?
Each 1099 type follows its own route. Form 1099-LTC needs analysis on Form 8853 rather than direct entry of the gross amount.
Do I have to report Form 1099-LTC on my tax return?
Review it every time. Form 8853 is required to claim an exclusion for periodic payments, even if the taxable amount is zero. Follow the current IRS instructions.
Is Form 1099-LTC taxable income?
The form isn't a tax bill. Some or all benefits may be excluded, depending on payment type, contract, certification, the limitation and qualified expenses.
What is Form 8853 and why might I need it for Form 1099-LTC?
Form 8853 reports taxable payments from long-term care contracts and accelerated death benefits. It also covers Archer MSAs.
What should I do if the amount on Form 1099-LTC is wrong?
Compare it with your payment records and ask the payer for a corrected form. Keep documentation, and get professional help if the deadline nears.
