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Tax exemption for pre-paid long term care


Tax exemption for pre-paid long term care

@TaxAideExpert, last year I made a large lump sum payment along with a couple of monthly payments for future long term care at a local senior facility.  I received information that a significant portion of these payments are tax deductable. 

My tax program directed me to list these amounts under "other medical expenses";  are there any other special requirements for itemizing these deductions?

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Not the Tax Aide Expert, sorry, guess they missed your post.  Hopefully you have received an answer to your tax question by now from somebody but if you haven't you will find the answer in IRS Publication 502 under the subcategory of Long Term Care specifically under the limits of: (read the whole LTC section - this is just a copy/paste of a portion of it)  Fom the link:

Qualified Long-Term Care Insurance Contracts

A qualified long-term care insurance contract is an insurance contract that provides only coverage of qualified long-term care services. The contract must:

1.  Be guaranteed renewable;

2.  Not provide for a cash surrender value or other money that can be paid, assigned, pledged, or borrowed;

3.  Provide that refunds, other than refunds on the death of the insured or complete surrender or cancellation of the contract, and dividends under the contract must be used only to reduce future premiums or increase future benefits; and

4.  Generally not pay or reimburse expenses incurred for services or items that would be reimbursed under Medicare, except where Medicare is a secondary payer, or the contract makes per diem or other periodic payments without regard to expenses.

The amount of qualified long-term care premiums you can include is limited. You can include the following as medical expenses on Schedule A (Form 1040).

1.  Qualified long-term care premiums up to the following amounts.

Age 40 or under—$430.

Age 41 to 50—$810.

Age 51 to 60—$1,630.

Age 61 to 70—$4,350.

Age 71 or over—$5,430.


2.  Unreimbursed expenses for qualified long-term care services.


Note. The limit on premiums is for each person.

Also, if you are an eligible retired public safety officer, you can't include premiums for long-term care insurance if you elected to pay these premiums with tax-free distributions from a qualified retirement plan made directly to the insurance provider and these distributions would otherwise have been included in your income.


It's Always Something . . . . Roseanna Roseannadanna
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