Mar
24
2008
Don’t forget about your long term care insurance deductions
Author: Byron UdellAs the April 15 tax deadline looms, you should not overlook the deductions allowed for long term care insurance.
According to the Internal Revenue Code, the 2008 deductible amounts can be as high as –
– $3,850 if you’re 70 or over*
– $3,080 if you’re over 60 but not over 70*
– $1,150 if you’re over 50 but not over 60*
– $580 if you’re over 40 but not over 50*
– $310 if you’re 40 or under*
* Before end of taxable year, if medical expenses exceed 7.5% of adjusted gross income
According to LTC Financial Partners LLC, the nation’s most experienced long term care insurance agency, the tax benefits may not end there. For instance, when a policy is designed to pay on a per-diem basis, a limited portion of the benefits may be excluded from taxable income. Also, when a policy is paid for out of a Health Savings Account (HSA), there can be tax advantages. HSAs are funded with pre-tax dollars, and long term care premiums are eligible medical expenses, according to the IRS (Publication 502).
For businesses, the tax breaks can be especially attractive. For example, when small business owners pay the premiums — for employees or themselves — it’s generally deductible as a business expense. The self-employed, S-corporation owners, and C-corporation owners are NOT subject to the 7.5% rule that limits the medical-expense deductions of individual taxpayers.
