Specialist, LTCi, DI, Annuities, Life, Designs In Life, LLC, Utah
I assume that the question is: "Can I take the premiums I pay for long-term care insurance (LTCi) and deduct all or part from my income tax return?"
The answer to that question is "Possibly".
The IRS permits a non-business owner to apply a portion of the premium paid for LTCi to the medical expenses section of Section A. There's a cap on how much one can apply to "medical expenses" in this part of Schedule A. It goes up every year. Here's the current table for 2013:
If you are 40, or younger, you can apply $360 of your premium to "medical expenses".
More than 40, but no more than 50, $680
More than 50, but no more than 60, $1360
More than 60, but no more than 70, $3640
More than 70, $4550
The maximum one used to be able to totally deduct for "medical expenses" on Schedule A had to exceed 7.5% of adjusted gross income (AGI). I believe that is now 10% of AGI, or soon will be. One can check for this information at www.irs.gov. If adding the maximum allowable LTCi premium amount from the table above to the "medical expenses" of Schedule A does not push your total expenses over 10% AGI, no deduction is allowable. But, if it does, you can only deduct that amount that exceeds 10% of AGI.
If you are a business owner, there are several options for deducting LTCi premiums other than using the Schedule A formulas and threshold. Most tax preparation software and certainly professional tax advisors will show how one might deduct LTCi premium payments, depending on how the business is set up (sole proprietorship, S-corp, C-corp) for tax purposes. Under current tax code, C-corps have the most generous allowances for deducting the payment of LTCi premiums by the company.
Legislation for 100% deduction of LTCi premium payment was in committee in Congress at the time of the terrorist attacks of 9/11/2001. That event put virtually all increased allowances and tax incentives for private purchase of LTCi on hold. No legislation is currently pending to change the in force formula shown above. It will increase in 2014 and forward for as long as Congress allows.
At this writing, a special commission on the federal government's involvement in supporting the height costs of long-term care for the elderly is being debated and testimony is being received from elder-care professionals. So far, little has been discussed about the role of privately owned LTCi as part of a solution for the coming crisis of those in the baby-boomer generation "taking too long to die". No part of this answer is intended to be tax advice. Consult with a qualified tax professional before making any decisions regarding the purchase of financial instruments or insurance policies and the tax treatment thereof.
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The answer to that question is "Possibly".
The IRS permits a non-business owner to apply a portion of the premium paid for LTCi to the medical expenses section of Section A. There's a cap on how much one can apply to "medical expenses" in this part of Schedule A. It goes up every year. Here's the current table for 2013:
If you are 40, or younger, you can apply $360 of your premium to "medical expenses".
More than 40, but no more than 50, $680
More than 50, but no more than 60, $1360
More than 60, but no more than 70, $3640
More than 70, $4550
The maximum one used to be able to totally deduct for "medical expenses" on Schedule A had to exceed 7.5% of adjusted gross income (AGI). I believe that is now 10% of AGI, or soon will be. One can check for this information at www.irs.gov. If adding the maximum allowable LTCi premium amount from the table above to the "medical expenses" of Schedule A does not push your total expenses over 10% AGI, no deduction is allowable. But, if it does, you can only deduct that amount that exceeds 10% of AGI.
If you are a business owner, there are several options for deducting LTCi premiums other than using the Schedule A formulas and threshold. Most tax preparation software and certainly professional tax advisors will show how one might deduct LTCi premium payments, depending on how the business is set up (sole proprietorship, S-corp, C-corp) for tax purposes. Under current tax code, C-corps have the most generous allowances for deducting the payment of LTCi premiums by the company.
Legislation for 100% deduction of LTCi premium payment was in committee in Congress at the time of the terrorist attacks of 9/11/2001. That event put virtually all increased allowances and tax incentives for private purchase of LTCi on hold. No legislation is currently pending to change the in force formula shown above. It will increase in 2014 and forward for as long as Congress allows.
At this writing, a special commission on the federal government's involvement in supporting the height costs of long-term care for the elderly is being debated and testimony is being received from elder-care professionals. So far, little has been discussed about the role of privately owned LTCi as part of a solution for the coming crisis of those in the baby-boomer generation "taking too long to die".
No part of this answer is intended to be tax advice. Consult with a qualified tax professional before making any decisions regarding the purchase of financial instruments or insurance policies and the tax treatment thereof.