Can You Deduct Long Term Care Premiums?

1040 Self Employed Health Insurance Deduction - 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 guarnatee is used if you come to be unable to care for yourself after having surgery, an accident or the infirmity of old age. Current statistical analyses indicate that at least 60% of all individuals will need extended help while their lifetime. It could be you need help for only a few weeks, a few months or many years.

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1040 Self Employed Health Insurance Deduction

The premiums can be quite expensive and some of us may never easily have to use the insurance. Unfortunately, it is one of those things you may be afraid to do without. As more of the people begins to age the concern tends to be shared by more people 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 expense (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 between ages 51 and 60 may deduct as much as ,270 in 2011 and ,310 in 2012).

In 2011, the Internal earnings assistance (Irs) also added some inflation adjustments for the tax deductibility limits of long term care guarnatee for 2012. State governments have also tried to help their taxpayers by contribution additional 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 someone can deduct 100% of long term care guarnatee premiums (subject to the maximum deductibility limits) without having to meet the 7.5% adjusted gross earnings curative expense 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 narrative this benefit as income.

In the case where your manager only pays a measure of the premium, you can take the rest of the payment 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 payment of the premium. The annuity option is not for every person so consult your guarnatee agent and make sure you understand all the tax implications

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