Instructions For Form 8853 - 2009 (Page 8 of 8) in pdf

Example 1

Step 1. They complete a statement for

Step 4. Mrs. Smith, Sam, and Deborah

Mrs. Smith for the first LTC period as

each complete Form 8853 as follows.

Mrs. Smith was chronically ill throughout

follows.

Mrs. Smith’s Form 8853:

2009 and received 12 monthly payments

on a per diem basis from a qualified LTC

1st LTC

2nd LTC

Line

Amount

insurance contract. She was paid $2,000

Line

Period

Form 8853

per month ($24,000 total). Mrs. Smith

$12,000 ($2,000 x 6 mos.)

incurred expenses for qualified LTC

$12,000

$24,000

services of $150 per day ($54,750) and

$50,680 ($280 x 181 days)

was reimbursed for one-half of those

$37,105

$12,000

$49,105

$27,150 ($150 x 181 days)

expenses ($27,375). She uses the equal

$ -0-

$-0-

payment rate method and therefore has a

$50,680

single benefit period for 2009 (January

Sam’s Form 8853:

$13,575 ($75 x 181 days)

1 – December 31). Mrs. Smith completes

Form 8853, lines 20 through 26, as

$37,105

1st LTC

2nd LTC

follows.

Line

Period

Form 8853

$ -0-

Step 2. They complete the aggregate

Line

Amount

$-0-

$16,200

statement for the second LTC period as

$-0-

$15,432

follows.

$24,000 ($2,000 x 12 mos.)

$-0-

768

$102,200 ($280 x 365 days)

Line

Amount

Deborah’s Form 8853:

$54,750 ($150 x 365 days)

$39,000 ($6,500 x 6 mos.)

$102,200

1st LTC

2nd LTC

Line

Period

Form 8853

$51,520 ($280 x 184 days)

$27,375 ($75 x 365 days)

$27,600 ($150 x 184 days)

$74,825

$-0-

$10,800

$51,520

$-0-

$10,288

$13,800 ($75 x 184 days)

$-0-

512

Example 2

$37,720

The facts are the same as in Example 1,

Paperwork Reduction Act Notice. We

$1,280

except Mrs. Smith’s son, Sam, and

ask for the information on this form to

daughter, Deborah, each also own a

Step 3. They allocate the aggregate per

carry out the Internal Revenue laws of the

qualified LTC insurance contract under

diem limitation of $37,720 on line 25

United States. You are required to give us

which Mrs. Smith is the insured. Neither

among Mrs. Smith, Sam, and Deborah.

the information. We need it to ensure that

Sam nor Deborah incurred any costs for

Because Mrs. Smith is the insured, the

you are complying with these laws and to

qualified LTC services for Mrs. Smith in

per diem limitation is allocated first to her

allow us to figure and collect the right

2009. From July 1, 2009, through

to the extent of the per diem payments

amount of tax.

December 31, 2009, Sam received per

she received during the second LTC

You are not required to provide the

diem payments of $2,700 per month

period ($12,000). The remaining per diem

information requested on a form that is

($16,200 total) and Deborah received per

limitation of $25,720 is allocated between

subject to the Paperwork Reduction Act

diem payments of $1,800 per month

Sam and Deborah.

unless the form displays a valid OMB

($10,800 total). Mrs. Smith, Sam, and

Allocation ratio to Sam: 60% of the

control number. Books or records relating

Deborah agree to use the equal payment

remaining limitation ($15,432) is allocated

to a form or its instructions must be

rate method to determine their LTC

to Sam because the $16,200 he received

retained as long as their contents may

periods.

during the second LTC period is 60% of

become material in the administration of

There are two LTC periods. The first is

the $27,000 received by both Sam and

any Internal Revenue law. Generally, tax

181 days (from January 1 through June

Deborah during the second LTC period.

returns and return information are

30) during which the per diem payments

Allocation ratio to Deborah: 40% of

confidential, as required by section 6103.

were $2,000 per month. The second is

the remaining limitation ($10,288) is

The average time and expenses

184 days (from July 1 through December

allocated to Deborah because the

required to complete and file this form will

31) during which the aggregate per diem

$10,800 she received during the second

vary depending on individual

payments were $6,500 per month ($2,000

LTC period is 40% of the $27,000

circumstances. For estimated averages,

under Mrs. Smith’s contract + $2,700

received by both Sam and Deborah

see the instructions for your income tax

under Sam’s contract + $1,800 under

during the second LTC period.

return.

Deborah’s contract).

If you have suggestions for making this

An aggregate statement must be

form simpler, we would be happy to hear

completed for the second LTC period and

from you. See the instructions for your

attached to Mrs. Smith’s, Sam’s, and

income tax return.

Deborah’s forms.

-8-

Instructions For Form 8853 - 2009 Page 8

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