The Internal Revenue Service (IRS) has announced increased deductibility levels for long term care insurance policies purchased in 2010. For the first time, the maximum deductible limit for an individual exceeds $4,000."
The federal government and an increasing number of states are sending a clear signal that individuals need to plan for long term care and tax deductibility and tax credits certainly make long term care insurance more attractive to millions. It is a positive sign to see limits for long-term care insurance deductibility increase especially when pension contribution limits for 2010 were not increased.
The end of the year provides a double tax-saving incentive for consumers. There is still time to take advantage of tax deductions in 2009 and also benefit from the increased deductible limits next year. The deductible limits under Section 213(d)(10) for eligible long-term care premiums includable in the term "medical care" are as follows:
|Attained Age Before Close of Taxable Year
||2009 Deductible Limits
||2010 Deductible Limits
|40 or less||$320||$330
|More than 40 but not more than 50||$600||$620
|More than 50 but not more than 60||$1,190||$1,230
|More than 60 but not more than 70||$3,180||$3,290
|More than 70||$3,980||$4,110
Source: IRS Revenue Procedure 2008-66 (2009 limits) and 2009-50 (2010 limits)
The American Association for Long-Term Care Insurance is the national association serving insurance and financial professionals who provide long-term care financing solutions. A complete explanation of tax deductible rules for individuals and business owners can be found on the Association's Web site: aaltci.org/tax
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