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2012 Tax Deductions for LTC Premiums

2-22-2012 - Taxpayers will be able to increase the amount they deduct on their federal taxes for long-term care premiums in 2012. To qualify for the deduction, two conditions must be met: 

First, the policy must be "qualified." If issued after Jan. 1, 1997, the policy must be in compliance with the regulations established by the National Association of Insurance Commissioners, and offer inflation and nonforfeiture protection (whether or not the insured party chooses those options). Any policy purchased before Jan. 1, 1997 will be grandfathered in and treated as qualified so long as it has been approved by the insurance commissioner of the state in which it was sold.

Second, the premiums, along with other unreimbursed medical expenses, must exceed 7.5 percent of the taxpayer's adjusted gross income.

Here are the IRS' new deductibility guidelines, based on the attained age of the taxpayer before the end of the taxable year: 

The 2012 deduction amounts are:
40 years or younger: $350 
41 - 50: $660 
51 - 60: $1310
61 - 70: $3500
71 and older: $4370

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