Federal long term care insurance premiums may be tax deductible under certain conditions. The deductibility of long term care insurance premiums depends on the policyholder's age and the total amount of medical expenses incurred during the tax year. For individuals who itemize deductions on their federal income tax returns, the premiums paid for federal long term care insurance policies can be included as a medical expense deduction. However, there are certain limitations and requirements that must be met in order to qualify for the deduction.
According to the Internal Revenue Service (IRS), the total amount of medical expenses must exceed a certain percentage of the taxpayer's adjusted gross income (AGI) in order to be deductible. For most taxpayers, the threshold is 7.5% of AGI. However, for taxpayers aged 65 and older, the threshold is temporarily reduced to 7.5% for tax years 2017 through 2020, after which it will increase to 10%.
It's important to note that the deduction for long term care insurance premiums is subject to the same overall limitations that apply to medical expense deductions. These limitations include the requirement that the taxpayer's total medical expenses must exceed the applicable threshold and that only the amount of medical expenses that exceeds the threshold can be deducted.
Additionally, the IRS has set a maximum limit on the amount of long term care insurance premiums that can be deducted as a medical expense. The limit varies depending on the age of the policyholder and is adjusted annually. For the most up-to-date information on the maximum deduction limits, it is recommended to consult the IRS website or a tax professional.
It's worth noting that state tax laws may also affect the deductibility of long term care insurance premiums. Some states may allow a deduction for long term care insurance premiums on state income tax returns, while others may not. It's important to consult the specific tax laws of your state to determine if long term care insurance premiums are deductible.
In summary, federal long term care insurance premiums may be tax deductible as a medical expense deduction, but certain conditions and limitations apply. It is recommended to consult the IRS website or a tax professional for specific guidance on the deductibility of long term care insurance premiums on federal income tax returns.