8 Replies Latest reply on Jan 10, 2012 6:34 PM by jocee

    LTC tax credit increase

    jkom51
      Just saw this in the NYTimes:
       
      "...Jesse Slome, executive director of the American Association for Long-Term Care Insurance, point(ed) out that the I.R.S. is going to allow slightly higher tax deductions in 2012 for the smattering of people who have bought private long-term care policies.

      The deduction for those who are aged 40 or younger rises from $340 to $350. For 40- to 50-year-olds, it climbs from $640 to $660. Those between 50 and 60 will be able to deduct $1,310 (up from $1,270) and those 60 to 70, a tidy $3,500 (up from $3,390). Insured people over 70 can deduct $4,370, an increase from $4,240. Most years see similar increases of 2 to 3 percent, Mr. Slome told me. Some states also give deductions, or even credits, on state taxes."

        • Re: LTC tax credit increase
          Scorekeeper81
          Wait a minute - - there is currently a tax deduction for LTC??  I knew our state has one, but didn't know about federal.  I do my taxes myself with a box program and was only prompted to provide this info at the state level.   
          So if a couple is filing jointly, they can each claim this tax deduction?

            • Re: LTC tax credit increase
              sarsfield
              It is also a pleasant surprise to me that the IRS gives tax credit for LTC expenses.  I didn't even know states did.  Could jkom51 tell us what "box program" he uses for doing his taxes.
               
              Sarsfield
                • Re: LTC tax credit increase
                  thom2
                  sarsfield said...
                  It is also a pleasant surprise to me that the IRS gives tax credit for LTC expenses.  I didn't even know states did.  Could jkom51 tell us what "box program" he uses for doing his taxes.

                   

                  Sarsfield


                  It seems as though it's a deduction and not a credit...could someone set me straight on that...thanks
                   
                  (a deduction on Schedule A - Medical Expenses - is subject to the 7.5% exclusion wheras credits usually come right off of the tax)
                   
                  Any clarification would be appreciated.
                   
                  Thanks
                   
                    • Re: LTC tax credit increase
                      mollyb
                      It is counted toward your 7% medical deduction for the federal deduction, if you even have 7% to deduct.
                      However, some states have tax credits or deductions that stand alone.
                        • Re: LTC tax credit increase
                          jkom51
                          It is indeed a deduction, but worth keeping in mind IF your medical expenses for the year are very large; e.g., you had a very large co-pay/uncovered illness or injury and your expenses are over 7.5% of gross adjusted income:
                           
                          From the WSJournal today:
                          Medical and miscellaneous deductions . A wide variety of unreimbursed medical expenses are deductible—from out-of-pocket insurance premiums to mileage to remediation for special-needs students—but only above 7.5% of a taxpayer's adjusted gross income (10% for AMT payers). Some taxpayers "bunch" deductions into one year, when possible, to jump this hurdle. For a list of qualified expenses, see IRS Publication 502, Medical and Dental Expenses.
                            • Re: LTC tax credit increase
                              Centurion28
                              Thanks for calling our attention this issue. I intend to read IRS Pub. 502; but how would you answer this question? 

                              Is it legal to carry forward ("bunch") medical expenditures, including Long Term Care Insurance premiums, for any years that you took a
                              standard deduction, because you couldn't itemize? Is this some sort of  legal carry-over?
                                • Re: LTC tax credit increase
                                  jkom51
                                  Centurion28 said...
                                  Thanks for calling our attention this issue. I intend to read IRS Pub. 502; but how would you answer this question? 

                                  Is it legal to carry forward ("bunch") medical expenditures, including Long Term Care Insurance premiums, for any years that you took a
                                  standard deduction, because you couldn't itemize? Is this some sort of  legal carry-over?
                                  Not as far as I know. The definition is "calendar year" only.
                                    • Re: LTC tax credit increase
                                      jocee
                                      You can only claim expenses in the tax year they are paid.  People may bunch medical expenses in one year (schedule surgery, dental work, get new glasses in the same year) so that the payments can count towards the 7.5%. You can't take expenses from various years and bunch them together.