15 Dec IRS ISSUES LONG-TERM CARE PREMIUM DEDUCTIBILITY LIMITS FOR 2015
The Internal Revenue Service (IRS) is increasing the amount taxpayers can deduct from their 2015 taxes as a result of buying long-term care insurance.
Premiums for “qualified” long-term care insurance policies (see explanation below) are tax deductible to the extent that they, along with other unreimbursed medical expenses (including Medicare premiums), exceed 10 percent of the insured’s gross income, or 7.5 percent for taxpayers 65 and older (through 2016).
These premiums – what the policyholder pays the insurance company to keep the policy in force – are deductible for the taxpayer, his or her spouse and other dependents. (If you are self-employed, the tax-deductibility rules are a little different: You can take the amount of the premium as a deduction as long as you made a net profit; your medical expenses do not have to exceed a certain percentage of your income).
However, there is a limit on how large a premium can be deducted, depending on the age of the taxpayer at the end of the year. Following are the deductibility limits for 2015. Any premium amounts for the year above these limits are not considered to be a medical expense.
Attained age before the close of the Maximum deduction for year
40 or less $380
More than 40 but not more than 50 $710
More than 50 but not more than 60 $430
More than 60 but not more than 70 $3,800
More than 70 $4,750
What is a “Qualified” Policy?
To be “qualified,” policies issued on or after January 1, 1997, must adhere to certain requirements, among them that the policy must offer the consumer the options of “inflation” and “non-forfeiture” protection, although the consumer can chose not to purchase these features. Policies purchased before January 1, 1997, will be grandfathered and treated as “qualified” as long as they have been approved by the insurance commission of the state in which they are sold.
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