It's that time of year again, and experts are reminding individuals with a qualified long term care insurance policy they may be able to deduct up to $3,980 for the 2009 tax year. Even more for couples.

"For a couple, the maximum amount doubles, to nearly $8,000," says Cameron Truesdell, CEO of LTC Financial Partners.

According to the Internal Revenue Service, for individuals the amounts of long term care insurance premiums that are deductible as medical expenses in 2009 can be as high as:

$3,980 if you're 70 or over
$3,180 if you're over 60 but not over 70
$1,190 if you're over 50 but not over 60
$600 if you're over 40 but not over 50
$320 if you're 40 or under

"Those who don't have policies, but want them, can set themselves up for substantial deductions next year," Truesdell says. For individuals, the amounts deductible as medical expenses in 2010 can be as high as:

$4,110 if you're 70 or over
$3,290 if you're over 60 but not over 70
$1,230 if you're over 50 but not over 60
$620 if you're over 40 but not over 50
$330 if you're 40 or under

"These deductions are not a one-time thing," Truesdell says. "They recur. You can take them each and every year that you pay premiums; and the deductible limits have been increasing annually."

Additional potential benefits, beyond the above federal deductions, include --

If your state offers tax deductions or rebates, and you qualify, these are additive to your federal deduction, if you qualify.
When a policy is designed to pay on a per-diem basis, a limited portion of the benefits may be excluded from taxable income.
When a policy is paid for out of health savings account, there can be tax advantages.

For businesses, there are tax breaks that can be especially attractive, according to LTCFP. For example, opportunities exist for some business owners to deduct premiums without having to satisfy the 7.5 percent medical expense threshold amount.

"With so much government support, we often wonder why more people don't get LTC policies," says Truesdell.

Instant Insights /

Taxpayers warned not to overlook LTC premiums

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