Long-term care insurance is a type of policy that provides payment if you require care from a nursing home, personal care home or home health care service because you are unable to independently perform daily living tasks like eating or bathing. Some long-term care insurance policies are considered qualified, meaning the policy is eligible for the long-term care insurance federal income tax credit.

Identification

The long-term care insurance tax credit allows individuals to deduct a portion of the cost of their long-term care insurance premiums from the amount of owed federal income tax.

Eligibility

To be eligible for the long-term care insurance credit, a policy must be individual, meaning it is not provided through your employer.

Amount

The Internal Revenue Service places caps on the amount that you are able to deduct from your income tax each year. These caps are typically based upon your age with categories for people who are under 40, between the ages of 40 and 50, between 50 and 60, between 60 and 70 and over aged 70.

State Deductions

Some states also allow qualified long-term care insurance premiums to be deducted from the amount of state income tax owed. Requirements and caps vary from state to state.

Considerations

Long-term care insurance premiums are considered a medical expense and normally are deductible only if the total cost of your medical expenses exceeds 7.5 percent of your total income. To determine if you are eligible for the long-term care insurance credit and if so how much you may deduct, contact an accountant or tax professional.

Source:

American Association for Long-Term Care Insurance: Tax Deductible Long-term care insurance