MANHASSET, N.Y. (SEND2PRESS NEWSWIRE) -- Many Americans with long-term care insurance are learning Uncle Sam may give them a hefty deduction for their premiums; but many fail to realize their state may grant an additional deduction or credit. "If you can double your money, so to speak, why not do it," says Gene Cutler, Manhasset, New York-based agent for LTC Financial Partners LLC (LTCFP), one of the nation's most experienced long term care insurance agencies. "More and more states are coming to the same conclusion as the federal government. It makes sense for them to subsidize private long-term care insurance, so they won't go broke providing public assistance. The taxpayer should take full advantage of these incentives."
So far 30 of the 50 states have jumped on the tax-incentive bandwagon, according to a 2008 survey by the Kaiser Family Foundation (KFF). Many offer state-tax deductions patterned after the federal deductions described in Section 213 (d)(1)(D) of the federal Internal Revenue Code. Others offer tax credits. These typically range from 10 percent to 25 percent of the long-term care insurance premiums paid during the taxable year, usually with a maximum limit per policy or covered individual.
New York, where Cutler maintains his offices, is a good example of a state actively promoting private long term care insurance through a tax credit. Regardless of one's income, the amount is a hefty 20 percent of the sum of premiums paid for a qualified long-term care insurance policy in a given tax year. "I refer to it as a 'subsidy' from New York, as long as you meet one basic requirement," says Cutler. "You pay taxes in New York State, period. You don't even have to live there. An out-of-state resident who works in New York and goes home to New Jersey or Connecticut, etc. gets the 20 percent credit as well. All this in a state that doesn't give away ice in the winter."
Individuals in states that do not offer a credit or deduction may still do well at tax time. "Eventually your state may join the tax-incentive bandwagon," says Cutler, "but in the meantime, you can take your federal deduction if you qualify, and it can be sizeable."
For the 2009 tax year, an individual with a qualified policy may be able to deduct up to $3,980, depending on age. For a couple, the maximum amount doubles, to nearly $8,000. 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.
"The federal and state incentives are not a one-time thing," Cutler says. "You can take them year after year."
LTCFP does not offer tax advice but teams up with accountants and other tax experts to help their clients get all the deductions or other benefits available to them. "We've formed strategic alliances with banks, accountants, other financial advisors and tax preparers, and organizations such as the National Association of Estate Planning Attorneys," says Cutler.
To get all that's coming to you, "Ask your tax expert to check into every deduction that may apply in your case in your state," Cutler advises. "And we'll lend a hand. We have over 500 experienced agents covering all 50 states, and we're ready to consult with anyone's accountant, tax attorney, or other advisor."
Requests for help, at no charge, may be made at http://www.ltcfp.us/ltcfp/taxbreaks.htm .
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