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I bought a Long Term Care policy and had to pay approximately $50K. Can any of the $50K be deducted on either Federal or State (Maryland) taxes? If so, where?

I will not be paying any premiums on this policy.

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I bought a Long Term Care policy and had to pay approximately $50K. Can any of the $50K be deducted on either Federal or State (Maryland) taxes? If so, where?

Currently, the IRS limits one-year deduction for long term care to the single year limit (see below), whether it was a lump sum payment or an annual payment.

Thus, under the current rules, only a little of the $50,000 would be deductible.

The 2016 limits are

  • $390 - age 40 or under
  • $730 - age 41 to 50
  • $1,460 - age 51 to 60
  • $3,900 - age 61 to 70
  • $4,850 - age 71 and over

IRC subsection 213(d)(10) states as follows: “…the term ‘eligible long-term care premiums’ means the amount paid during a taxable year by any individual for any long-term care insurance contract…..to the extent such amount does not exceed the limitation…." There is no allowance for single premium versus annual payments.

There do not appear to be any rulings or other interpretations on this subject (yet).

In Maryland, "If you purchase a long-term care insurance contract for yourself or certain members of your family, you may be eligible for a one-time credit of up to $500 for each insured."

and

"To claim the credit, you must complete Part E of Form 502CR, and attach it with your Maryland Income Tax Return (Form 502, 505 or 515)." See the Maryland state website.

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I bought a Long Term Care policy and had to pay approximately $50K. Can any of the $50K be deducted on either Federal or State (Maryland) taxes? If so, where?

Currently, the IRS limits one-year deduction for long term care to the single year limit (see below), whether it was a lump sum payment or an annual payment.

Thus, under the current rules, only a little of the $50,000 would be deductible.

The 2016 limits are

  • $390 - age 40 or under
  • $730 - age 41 to 50
  • $1,460 - age 51 to 60
  • $3,900 - age 61 to 70
  • $4,850 - age 71 and over

IRC subsection 213(d)(10) states as follows: “…the term ‘eligible long-term care premiums’ means the amount paid during a taxable year by any individual for any long-term care insurance contract…..to the extent such amount does not exceed the limitation…." There is no allowance for single premium versus annual payments.

There do not appear to be any rulings or other interpretations on this subject (yet).

In Maryland, "If you purchase a long-term care insurance contract for yourself or certain members of your family, you may be eligible for a one-time credit of up to $500 for each insured."

and

"To claim the credit, you must complete Part E of Form 502CR, and attach it with your Maryland Income Tax Return (Form 502, 505 or 515)." See the Maryland state website.

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