The amount you can deduct on your taxes as a result of buying long-term care insurance has been increased by the IRS for 2012.
If you itemize your deductions, you can generally deduct part of your premiums if the premiums, together with your other unreimbursed medical expenses, amount to more than 7.5 percent of your adjusted gross income.
The maximum amount of premiums you can deduct each year depends on your age at the end of the year. For 2012, the maximums are:
|40 or less||$350|
For policies issued in 1997 or later, the premiums are deductible so long as the policies meet certain requirements. For instance, they must give you the option of “inflation protection” and “non-forfeiture protection.” (You don’t have to choose these options, but the policy has to offer them.)
For policies issued before 1997, the premiums are deductible if the policies were approved by the state insurance commissioner.
The rules for deductibility are different if you’re self-employed. In that case, you can generally take the deduction as long as you made a net profit, even if your medical expenses don’t exceed 7.5 percent of your income.