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Learn the ins and outs of long-term care insurance.
Q: I work for a large multispecialty practice. Can I deduct the premiums I pay for long-term care insurance?
Premiums for qualified long-term care insurance policies will be treated as a medical expense and will be income tax-deductible to the extent that they, along with other unreimbursed medical expenses, exceed 7.5% of the insured's adjusted gross income (AGI).
The annual maximum amount that can be deducted for each individual depends on the insured's age at the close of the taxable year. These deductible maximums are indexed and increase each year for inflation.
Note that starting in 2013, the threshold to deduct medical expenses will increase from 7.5% to 10% of AGI. The threshold increase will be delayed until 2017 for those aged 65 or older. Also note that this information applies only to taxpayers who itemize deductions.
Send your money management questions to firstname.lastname@example.org. Answer provided by Lawrence B. Keller, CFP, CLU, ChFC, founder of Physician Financial Services in Woodbury, New York.