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We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free - so that you can make financial decisions with confidence.
Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover.
How We Make Money.
The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you.
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Dear Tax Talk,
Can you deduct long-term care insurance premiums? — Judith
Dear Judith,
A long-term care insurance policy provides a daily allowance for the care of an individual who is no longer able to care for herself. The daily allowance is intended to cover the costs of nursing home care, nurses, aides and similar expenses. These policies became popular in the 1990s.
The policy premium varies depending on a person’s age, health and the amount of daily allowance. Long-term care premiums within certain limits are deductible as itemized medical expenses, as are health insurance premiums. The total of itemized medical expenses is deductible if it exceeds 7.5 percent of AGI (adjusted gross income).
Self-employed individuals and S corporation shareholders with wages can deduct the premiums for long-term care, within certain limits, as an adjustment to AGI without having to apply the 7.5-percent threshold applicable to itemized medical expenses.
Qualified long-term care premiums up to the annual amounts shown below can be deducted per individual:
Annual amounts
Age
Amount
40 or under
$310
41 to 50
$580
51 to 60
$1,150
61 to 70
$3,080
71 or over
$3,850
The insurance contract must:
Be guaranteed renewable.
Not provide for a cash surrender value or other money that can be paid, assigned, pledged or borrowed.
Provide that refunds, other than refunds on the death of the insured or complete surrender or cancellation of the contract, and dividends under the contract must be used only to reduce future premiums or increase future benefits.
Generally not pay or reimburse expenses incurred for services or items that would be reimbursed under Medicare, except where Medicare is a secondary payer, or the contract makes per diem or other periodic payments without regard to expenses.
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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