While next year's tax season is several months away, it tends to brings out the chance to save money in everyone. Savings, in this regard, means figuring out ways to reduce one's taxable income so that a chance at an income tax refund can be realized. Having a refund check is especially important for the elderly, because it is likely the largest individual check to be received all year.
Elderly individuals who pay long term care (LTC) insurance premiums may deduct such costs from their income. While the actual deductible amount may follow a complicated formula, premium costs are generally deductible if they exceed a certain percentage of a taxpayer's adjusted gross income (AGI) depending on the person's age.
For example, those age 70 and older may deduct up to $5,110 in premiums for the 2017 tax year. Taxpayers age 60 to 70 may deduct $4,090. Those between age 50 and 60 may deduct $1,530 and taxpayers younger than 50 may deduct $770. Finally, those younger than 40 may only deduct $410.
Finding the allowable deductible follows a complicated formula where LTC premiums are compared to the total of all other medical expenses. For those who are not used to using computer programs to calculate expenses and deductions, having the guidance of an experienced attorney can be beneficial.
A skilled lawyer can make sense of all the complicated calculations and ensure that federal taxation rules are followed; which can make the difference between receiving an income tax refund check and owing federal taxes.
The preceding is presented for informational purposes only and is not legal advice.
Posted on Estate Planning