IRS Increases Deduction for LongTerm Care Insurance Premiums
If you are paying premiums for long-term care insurance, you'll get a bigger tax break beginning in 2010. The amount the insured can deduct is pegged to attained age at the end of the taxable year. Also,premiums are treated just like medical expenses; therefore, all the insured's medical expenses (including Medigap premiums) must exceed 7.5 percent of the insured's adjusted gross income to be deductible.
The 2010 deduction amounts are:
40 years or younger: $330 (was $329 for 2009)
41 - 50: $620 (was $600 for 2009)
51 - 60: $1230 (was $1190 for 2009)
61 - 70: $3290 (was $3180 for 2009)
71 and older: $4110 (was $3980 for 2009)
To be eligible for these deductions, the policy must adhere to regulations established by the National Association of Insurance Commissioners. The policy must offer inflation and nonforfeiture protection. Policies purchased before 1997 are grandfathered in so long as they have been approved by the state's insurance commissioner. Check with your insurance agent if you're not certain if your policy qualifies.
