Dear Tax Talk,
Are dental insurance and long-term care insurance premiums tax deductible?
Medical expenses, including insurance, are considered tax-deductible. Dental insurance and a certain amount of long-term care insurance premiums are considered medical expenses.
There are two ways an individual can claim a deduction for payments for these two types of insurance. If the individual is self-employed and meets certain other conditions, the payment of both insurances can be considered an adjustment to gross income. If the self-employed individual fails to meet these conditions and for all other individuals who are not self-employed, the payment of these insurance costs can be considered additional medical expenses as an itemized deduction on Schedule A of Form 1040.
Medical expenses for the year are deductible to the extent they exceed 7.5 percent of AGI (adjusted gross income). For example, if your AGI is $50,000, only your medical expenses in excess of $3,750 for the year will benefit you as an itemized deduction.
All amounts paid for dental insurance premiums are considered medical expenses. Premiums paid for long-term care are capped based on your age. The caps also change annually to take into account inflation. The caps for 2009 are as follows.
|Attained age before the close of the taxable year||Maximum deduction|
|40 or less||$320|
|More than 40 but not more than 50||$600|
|More than 50 but not more than 60||$1,190|
|More than 60 but not more than 70||$3,180|
|More than 70||$3,980|
For example, if you are age 45 and pay $50 per month in premiums, your entire $600 in premiums will be considered deductible as medical expenses. If you were age 35, only $320 of the $600 paid would be considered medical expenses and the remainder would not be deductible.
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