Question

Premiums paid for long-term care policies are deductible from income tax under what circumstances?

A. Only if the policyholder is over 65
B. Only if the policy is a partnership policy
C. Only if the policyholder is in a nursing home
D. If the policy meets IRS guidelines

Answer 1

Premiums for long-term care policies are tax deductible if they meet specific IRS guidelines, not solely based on the policyholder's age, the partnership status of the policy, or the living situation of the policyholder. Such premiums are considered part of the medical expenses deduction.

Step-by-step explanation:

Premiums paid for long-term care policies are deductible from income tax under the circumstance that D. If the policy meets IRS guidelines. These guidelines specify that the policy must be qualified as per IRS definitions, with a number of conditions that have to be met regarding the policy's coverage, benefits, and consumer protections. These deductions are included as part of the medical expenses deduction, which is itself subject to additional limits. For example, for the tax year, you can only deduct the amount of your total medical expenses that exceed 7.5% of your adjusted gross income (AGI).

It's important to note that this tax deduction does not on the policyholder's age, whether the policy is a partnership policy, or if the policyholder is in a nursing home.