The IRS provides a partial tax deduction for owners of Long Term Care insurance!Posted: November 30, 2018
Sharing an important point the last day of November’s Long Term Care Awareness Month. Owning what I like to call Long Term “Health” insurance can have a positive effect on taxes for some individuals.
How? The IRS considers the cost a person has for a tax-qualified Long Term insurance plan a medical expense. Thus, when they complete their annual IRS 1040 tax return they are eligible to take an age based partial deduction.
The deduction, though small for many, is the specific amount shown in the following age range list not the annual cost they pay for their plan. Having a tax deduction of any size results in their overall plan cost being a little lower!
The IRS reports the allowable deduction which can be used when completing the 2019 1040 is:
-•- age 40 and under = $420. The same as in 2018.
-•- 41 through 50 = $790. Up from $780.
-•- 51 through 60 = $1,580. Up from $1,560.
-•- 61 through 70 = $4,220. Up from $4,160.
-•- 71 and older = $5,270. Up from $5,200.
How to take this deduction? The amount from this schedule can be added to any other unreimbursed medical care expenses. If an under 65 person’s total medical expenses are above 10% of their Adjusted Gross Income this amount is a deduction. Individuals 65 and older can deduct amounts if medical expenses are above 7.5%.
John C Parker, RHU, LTCP