Retirement Planning Common Questions |
Can I deduct premiums paid for long-term care insurance (LTCI)?
Answer:
It depends on several factors. Your LTCI contract must be a qualified one, and the total of your medical expenses (including your LTCI deduction) must exceed 7.5 percent of your adjusted gross income (AGI). Qualified LTCI premiums are deductible as medical expenses (subject to the 7.5 percent of AGI floor) within certain limits, based on your age.
If you bought your policy before January 1, 1997, and it met the requirements of the state in which it was issued, it is automatically considered a qualified policy. LTCI contracts issued subsequently are only considered qualified for a tax deduction if they meet certain federal standards. In 2007, qualified LTCI premiums are deductible as medical expenses (subject to the 7.5 percent of AGI floor) within the following limits, based on your age at the end of the tax year:
|
Age: |
Limit on Deduction: |
|
40 or less |
$290 (up from $280 in 2006) |
|
41-50 |
$550 (up from $530 in 2006) |
|
51-60 |
$1,110 (up from $1,060 in 2006) |
|
61-70 |
$2,950 (up from $2,830 in 2006) |
|
71 and older |
$3,680 (up from $3,530 in 2006) |
For more information, consult a tax professional.
