A Tax Break for Long-Term-Care Insurance Premiums?
Most policies qualify for a tax write-off but only if you have substantial out-of-pocket medical expenses.
Can I take a tax deduction for my long-term-care insurance premiums?
Maybe. If you have a tax-qualified long-term-care insurance policy, you may be able to deduct a portion of your premiums as a medical expense. (Most traditional long-term-care policies qualify, but ask your insurer.) You can deduct eligible out-of-pocket medical expenses only if you itemize your deductions, and then only the portion of medical expenses that is more than 10% of your adjusted gross income (7.5% if you are 65 or older). For example, if you're 50 years old and your adjusted gross income is $50,000, you can deduct eligible out-of-pocket medical expenses above $5,000.
The amount that counts toward the deduction for long-term-care policies is based on your age. If you're 40 or younger, you can count up to $380 you paid in qualified long-term-care premiums in 2015. You can count up to $710 if you’re 41 to 50, $1,430 if you're 51 to 60, $3,800 if you’re 61 to 70, and $4,750 if you're 71 or older (the amount that qualifies is slightly higher for 2016). These limits are for each person, so a couple filing jointly can each count the premiums they paid up to the limit for their ages.
Many out-of-pocket medical and dental expenses count toward the medical expense deduction. See IRS Publication 502, Medical and Dental Expenses, for a list of eligible expenses. You can include expenses you paid for yourself, your spouse and your dependents. You can’t count any portion of the medical expenses that have been reimbursed by insurance or by tax-free withdrawals from a health savings account or a flexible-spending account.