The Internal Revenue Service has announced the 2008 limitations on the deductibility of long-term care insurance premiums from taxes.
Premiums for “qualified” long-term care policies are treated as an unreimbursed medical expense. These premiums — what the policyholder pays the insurance company to keep the policy in force — are deductible to the extent that they, along with other unreimbursed medical expenses (including “Medigap” insurance premiums), exceed 7.5 percent of the insured’s adjusted gross income. Long-term care insurance premiums are deductible for the taxpayer, his or her spouse and other dependents. If you are self-employed, the rules are a little different. You can take the amount of the premium as a deduction as long as you made a net profit — your medical expenses do not have to exceed 7.5 percent of your income.
However, there is a limit on how large a premium can be deducted, depending on the age of the taxpayer at the end of the year. Following are the deductibility limits for 2008. Any premium amounts above these limits are not considered to be a medical expense. These numbers list first the attained age before the close of the taxable year and then the maximum deduction for that age range.
– 40 or less = $310
– 41-50 = $580
– 51-60 = $1,150
– 61-70 = $3,080
– 71 or more = $3,850
About Evan H Farr, CELA, CAP
