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Long Term Care Premium Deduction

Long Term
Care

The deduction of tax qualified long-term care insurance policies was increased for 2021. Thus, the long-term care insurance deduction can be considered a retirement subsidy. However, you need to check if your newly purchased long-term care insurance policies offers indeed the tax deductible opportunity. See other tax deduction including medical expense deductions.

When you prepare and eFile your 2021 Tax Return, enter the qualified long term care premium dollar amount during the tax interview and the tax app will show it on Schedule A of your Tax Return.

Long Term Care Deduction Limitations

For 2021, the LTC or Long Term Care insurance deduction limits have been increased - see the amounts in the table below. As an example: a married filing jointly couple age 70 or older who both have the right kind of long-term care insurance policy can deduct as much as $11,280 in 2021. In comparison, the Tax Year 2020 limit was $10,860. Important: This is only available to tax-qualified health-based long-term care insurance policies.

Note: If you require long term care, it might be tax deductible. This long-term care must be medically necessary, e.g. for preventive, therapeutic, treating, rehabilitative, personal care, or other services. See Medical and Dental Expenses (Including the Health Coverage Tax Credit) for a full list of qualifying services. Generally, the cost of meals and lodging at an assisted-living facility or nursing home is included if the reason for being there is to get qualified medical care.

In comparison, linked-benefit Long Term Care or LTC policies, such as life insurance and/or annuity policies with long term care benefits, in most cases DO NOT qualify for the insurance or premium tax deduction.

Generally, if a taxpayer purchases the Long Term Care insurance before retirement, the tax deduction does not apply or the taxpayer does not reach the threshold to deduct the LTC premium. In comparison, after working on the start of retirement, taxpayers can benefit more likely from this tax deduction. Again, check with the insurance carrier to be certain about this tax deduction.

Similar to the tax deduction, like the deduction for long-term-care services, the long term care insurance premium is an itemized deduction for medical expenses. Check on the given threshold by tax year, age, etc.:

Attention: If you are self-employed, you might be able to deduct premiums paid for long-term-care insurance as an adjustment to income without having to itemize.

LTC Tax Deduction Limits for Long Term Care Insurance

The table here is for the current year, 2021 Tax Return due in 2022. Use these figures to plan your 2021 return - prepare and e-file on eFile.com and get the most out of your refund.

Age
Deduction Limit
40 or less
$450
41-50
$850
51-60
$1,690
61-70
$4,520
71 or more
$5,640

2022 LTC

Use the rates below to plan for your 2022 Taxes as these apply only to the Tax Year 2022.

Age
Deduction Limit
40 or less
$450
41-50
$850
51-60
$1,690
61-70
$4,510
71 or more
$5,640

Previous Year Deduction Amounts

The table below shows the rates by tax year and age for previous years - see all back tax resources, such as forms and calculators.

LTC Tax Deduction Limits by Age, Tax Year
Age 40 or less
2020: $430
2019: $420
Age 41-50
2020: $810
2019: $790
Age 51-60
2020: $1,630
2019: $1,580
Age 61-70
2020: $4,350
2019: $4,220
Age 71 or more
2020: $5,430
2019: $5,270

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