Buyers of long-term care insurance will be able to deduct more of their premiums from their federal income tax returns in 2013.
These increases are across the board for all ages and allows the premium to be deducted by individuals, up to the amount allowed within their age group.
“For taxable years beginning in 2013, the limitations have been increased,” Jesse Slome, executive director of the American Association for Long-Term Care Insurance, said in a statement. “Tax advantaged long term care insurance remains one of the few remaining significant tax-savings benefits especially meaningful for small business owners.”
The deductible limits under Section 213(d)(10) for eligible long-term care premiums includable in the term ‘medical care’ are based on the taxpayers attained age before the close of the taxable year.
For those age 40 or less, the maximum deduction is $360 an increase from the 2012 amount ($350). The maximum amount that may be deducted by an individual who is more than age 70 is $4,550, an increase from $4,370 in the prior year.
“The federal government and a growing number of states are offering deductions and in some cases even credits to encourage individuals to plan for the eventual need of costly long-term care,” Slome said.
According to the just released IRS Revenue Procedure 2012, the deductible limits range from a low of $360 to as much as $4,550 per individual.
“The deductions are especially meaningful at older ages when it is likely a couple will have lower income and potentially other medical expenses necessary to meet minimum thresholds,” Slome said. “That said, people must buy long-term care insurance when they can still health qualify. Tax deductions are a meaningful added plus to the potential of not having to depend on family members or spend your retirement income for care.”
For calendar year 2013, the per-diem limitation under Section 7702B(d)(4) for periodic payments received under a qualified long-term care insurance contract is $320 (the 2012 limit was $310).
The deductions allowed within each age group are:
• 40 and under, a limit of $330
• 41-50, a limit of $620
• 51-60, a limit of $1,230
• 61-70, a limit of $3,290
• 71 and older, a limit of $4,110
