Long-Term Care Insurance Could Mean An Increased Tax Deduction
I realize we are coming into the holiday season and our thoughts may resist being turned toward the 2018 tax season. However, the effort could be well worth it since the Internal Revenue Service (IRS) is increasing the amount taxpayers can deduct from their 2018 income as a result of buying long-term care insurance.
This is a fine time to review your insurance coverage with your insurance professional.
Make sure you have long-term care insurance and see if your premium meets the requirements to be qualified for the tax deduction.
The IRS spells out the deductions as follows:
“For taxable years beginning in 2018, the limitations under § 213(d)(10), regarding eligible long-term care premiums includible in the term “medical care,” are as follows:
Attained Age Before the Close of the Taxable Year Limitation on Premiums
40 or less $420
More than 40, but not more than 50: $780
More than 50, but not more than 60: $1,560
More than 60, but not more than 70: $4,160
More than 70: $5,200”
If you have a long-term care policy issued on or after January 1, 1997, it must adhere to certain requirements to be qualified.
One of the requirements is that the policy must offer the options of “inflation” and “non-forfeiture” protection. However, you don’t have to purchase these features, the policy simply has to offer them. In addition, those long-term care policies purchased before January 1, 1997, will be grandfathered in and treated as qualified as long as the insurance commissioner of the state in which they were sold has approved them.
Give yourself a gift before the holidays. Make sure you have long-term care insurance. If not, this is a great time to make the leap. Do it for your loved ones as well as the increased tax deduction.