Can You Deduct Long Term Care Premiums?

Can I Deduct Pre Tax Health Insurance Premiums - Can You Deduct Long Term Care Premiums?

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One of the big concerns if you are over 50 is how are you going to pay for long term care insurance. This type of assurance is used if you become unable to care for yourself after having surgery, an accident or the weakness of old age. Current statistical analyses indicate that at least 60% of all individuals will need extended help during their lifetime. It could be you need help for only a few weeks, a few months or many years.

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Can I Deduct Pre Tax Health Insurance Premiums

The premiums can be quite expensive and some of us may never certainly have to use the insurance. Unfortunately, it is one of those things you may be afraid to do without. As more of the citizen begins to age the concern tends to be shared by more citizen and the government also has cause to be concerned.

The government wants individuals to protect themselves with long term care policies and has offered some help in the form of tax incentives.

Long-term care premiums are deductible as a curative cost (subject to the 7.5 percent-of-Agi floor), although how much of a deductions you can take does depend on your current age. For example, a taxpayer in the middle of ages 51 and 60 may deduct as much as ,270 in 2011 and ,310 in 2012).

In 2011, the Internal wage aid (Irs) also added some inflation adjustments for the tax deductibility limits of long term care assurance for 2012. State governments have also tried to help their taxpayers by contribution added deductions. Currently the following states offer some type of tax deduction or reputation for extended care insurance: Alabama, Arkansas, California, Colorado, District Of Columbia, Hawaii, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Minnesota., Mississippi, Missouri, Montana, Nebraska, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oregon, Virginia, West Virginia, Wisconsin

A self-employed person can deduct 100% of long term care assurance premiums (subject to the maximum deductibility limits) without having to meet the 7.5% adjusted gross wage curative cost requirement.

If your manager pays your premiums for you, your manager takes the tax deduction as a enterprise expense, but age is not a factor here. Though you do not get a deduction you not have to record this benefit as income.

In the case where your manager only pays a portion of the premium, you can take the rest of the cost as a deduction but you do have use the age restrictions.

Using an Hsa to pay for the premiums does not give you a deduction but your contribution does get deducted from your gross income. If you use the money for curative expenses such as long term care the distribution is tax free.

You can also use the proceeds from an annuity to pay for long term care. The money you get from the annuity is not taxed but you do not get to make a deduction for the cost of the premium. The annuity selection is not for everyone so consult your assurance agent and make sure you understand all the tax implications

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