This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Take Long-Term Care Deduction This Tax Season

NEW YORK (BankingMyWay) Taxpayers who pay for long-term care insurance and who don't take available deductions on that insurance are leaving money on the table that Uncle Sam is only too happy to grab.

Most American don't realize they can deduct long-term care insurance on their taxes, which means they're missing out on thousands of dollars in savings.

An individual can deduct as much as $4,660 for long-term care insurance premiums paid in 2014, says Jesse Slome, director of the American Association for Long Term Care Insurance. The maximum for 2013 is $4,550.

In general, the older you are, the easier it is to qualify for the deduction.

"During their working years, individuals rarely qualify for the long-term care insurance tax deduction. After retirement, qualifying is typically easier," Slome says. According to IRS rules, long-term care insurance is considered a medical expense and thus is "tax-qualified" for a deduction based on the taxpayer's age.

Someone older than 50 but younger than 60 can deduct up to $1,400, or $2,800 for a same-age couple, Slome says. An individual age 70 or older can include up to $4,660 (or $9,320 for a same-age couple). The amounts are indexed for inflation and increase each year. According to IRS figures, 60% of taxpayers over the age of 65 who itemized deductions in 2011 were able to take the deduction.

"During your working years, it's hard to take advantage of the deduction. Your salary or self-employed income makes meeting the IRS-required threshold difficult," he says. "But after retirement your salary income drops or disappears completely, making it far more likely you'll be deducting medical expenses."

It's cheaper to buy long-term care insurance while you're in your working years, because in general the younger you are, the cheaper the long-term care insurance costs, Slome says.

"After retirement owning long-term care insurance can help lower your tax bill," Slome says. "But it's best to obtain this coverage prior to retirement because the costs are lower and you are more likely to meet health qualification requirements."

Slome calls this the "buy now, deduct later" strategy essentially it's a good move for your Golden Years and a future tax deduction.

If you're paying for long-term care insurance, check with a good tax accountant before April 15 to see how much you can save on the deduction. It could be the best (and most overlooked) move you'll make this tax season.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
AAPL $128.46 0.00%
FB $78.97 0.00%
GOOG $558.40 0.00%
TSLA $203.34 0.00%
YHOO $44.28 0.00%

Markets

DOW 18,132.70 -81.72 -0.45%
S&P 500 2,104.50 -6.24 -0.30%
NASDAQ 4,963.5270 -24.3630 -0.49%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs