Long Term Care Insurance Premiums are Eligible for Tax Deductions
Tax-qualified long term care insurance (LTCI) premiums are considered medical expenses. For an individual who itemizes income tax deductions, medical expenses are deductible to the extent that they exceed 7.5% of the individuals’ Adjusted Gross Income. The amount of the LTCI premium treated as a medical expense is limited to the eligible long term care (LTC) premiums.
Wisconsin law allows individuals to claim a subtraction on the Wisconsin income tax return for the amount paid during the taxable year for a long term care insurance policy that covers the individual or his or her spouse.
“Long term care insurance policy” means a disability insurance policy or certificate advertised, marketed, offered, or designed primarily to provide coverage for care that is provided in your home or in an institutional or community-based setting. The care must be convalescent or custodial care or care for a chronic condition or terminal illness.
Maximum Deductions for Qualified LTC Insurance Premiums Under IRC Section 2012
|40 or Less||$350|
|More than 40 but no more than 50||$660|
|More than 50 but no more than 60||$1,320|
|More than 60 but no more than 70||$3,500|
|More than 70||$4,370|
It is important to note, that if an individual claims the Wisconsin subtraction for long term care insurance, the portion of the medical expense deduction for long term care insurance cannot be used in the computation of the Wisconsin itemized deduction credit.
Wisconsin residents, for more information on long term care insurance or tax benefits for business owners offering long term care as a benefit, please contact Pat Driscoll.