IRS Issues Long-Term Care Premium Deductibility Limits for 2011

Social Security benefits may be stagnant, but the IRS is increasing the amount you can deduct on your 2011 taxes as a result of buying long-term care insurance. Premiums for “qualified” long-term care insurance policies (see explanation below) are tax deductible provided that they, along with other unreimbursed medical expenses, exceed 7.5 percent of the insured’s adjusted gross income..

These premiums — what the policyholder pays the insurance company to keep the policy in force — are deductible for the taxpayer, his or her spouse and other dependents. (If you are self-employed, the tax-deductibility rules are a little different: You can take the amount of the premium as a deduction as long as you made a net profit; your medical expenses do not have to exceed 7.5 percent of your income.) However, there is a limit on how large a premium can be deducted, depending on the age of the taxpayer at the end of the year. Following are the deductibility limits for 2011. Any premium amounts for the year above these limits are not considered to be a medical expense.