It’s true. For some employers, Long Term Care Insurance can offer tax relief. See the article below for details.
OCT 31, 2014 | BY ALLISON BELL, LifeHealthPro
The Internal Revenue Service (IRS) is increasing long-term care insurance (LTCI) deductibility for taxpayers in some age groups as much in 2015 as it did in 2014.
For other consumers, the size of LTCI deductibility increases will slow.
The IRS announced the new 2015 LTCI deduction limits in IRS Revenue Procedure 2014-61. The IRS included the new LTCI limits in a document that also sets other 2015 deduction limits, such as the overall limit on itemized deductions and the dollar limitation on employee contributions to health flexible spending arrangements (FSAs).
Section 213(d)(10) of the Internal Revenue Code (IRC) lets most taxpayers list a portion of their LTCI premiums with other medical expenses, if they have enough medical expenses to deduct those expenses.
Self-employed people can deduct all LTCI premiums up to the deductibility limit, even if they do not have enough medical bills to itemize medical expenses. That makes the LTCI tax break “especially meaningful for small business owners,” according to Jesse Slome, executive director of the American Association for Long-Term Care Insurance (AALTCI).
The size of the LTCI deduction cap varies by age.
For 2015, the IRS is changing the premium deductibility limits to:
- $380, from $370, for taxpayers ages 40 or younger.
- $710, from $700, for consumers ages 41 to 50;
- $1,430, from $1,400, for consumers ages 51 to 60;
- $3,800, from $3,720, for consumers ages 61 to 70; and
- $4,750, from $4,660, for consumers ages 70 and older.
For consumers ages 40 and younger, and for consumers ages 61 to 70, the amount of the 2015 deductibility increase will be the same as the amount of the 2014 deductibility increase. The increase will stay at $10 for the youngest LTCI holders and at $80 for holders in their 60s.
The inflation adjustments will shrink to $10, from $20, for consumers ages 41 to 50; to $30, from $40, for consumers ages 51 to 60; and to $90, from $110, for consumers over the age of 70.