Manage Your Taxes Wisely with Long Term Care Insurance
Are you on the verge of insanity due to soaring tax rates? You have two options and these are to either put up with it or work for that long term care tax deductions.
If you answered the former, it is pointless to proceed with this reading but if it’s the latter then you’re in for one good surprise.
You simply have to plan your long term care (LTC) with a tax-qualified long term care insurance (LTCI) policy to receive tax deductions at a vast rate. To expound, annual premiums that are paid into tax-qualified LTCI polices are treated as medical expenses and under Section 213(d) of the Internal Revenue Code all eligible medical expenses can be deducted from one’s income tax.
Money that is paid for long term care services is considered as a medical expense so an individual who receives in-home care or pays a loved one’s nursing home expenses can deduct his LTC costs exceeding 10% of his Adjusted Gross Income (AGI).
For instance, a taxpayer buys his 78-year-old mother a wheelchair, foots her doctor’s checkup fee, and lets her undergo expensive physical therapy every week. If his AGI is $85,000 and his total spending on LTC is $9,000 he can include this amount in his itemized deductions because it exceeds his AGI.
At a glance, it may seem all right. To cover your own LTC expenses or a loved one’s and be able to deduct your expenses from your income tax. But if you study it carefully, isn’t it just pathetic to be able to pay lower taxes in exchange for your good health or that of someone dear to you?
Enjoy Long Term Care Tax Deductions Today
Nobody in your family has to be subjected to LTC before you can enjoy LTC tax advantages. As mentioned earlier in this article, you simply have to purchase a tax-qualified LTCI policy and you instantly qualify for huge tax deductions.
Your age at the end of each taxable year will determine the amount of your LTCI premium that will be treated as a medical expense and deductible. Older policyholders get to enjoy a higher deductible as the IRS sees to it that it increases the deductible limit of every insured taxpayer in order to keep up with inflation.
For example, this year the deductible limit of policyholders who are 40 years old or younger is $350 so this much of their premium shall be deducted from their income tax. Taxpayers between the ages of 41 and 50 can deduct $660, the deductible limit of policyholders between 51 and 60 is $1,310, those over 60 but not more than 70 get to deduct $3,500, while those exceeding 70 years old have a deductible limit of $4,370.
Married couples with a big age difference are advised to purchase a policy that comes with a shared pool of benefits so that they can maximize the eligible tax deductible.
For other questions about long term care deductions, contact the IRS or your LTCI specialist as he can no doubt elaborate on this topic.
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