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.
2009 medical caps
|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.
To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. Taxpayers should seek professional advice based on their particular circumstances.
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