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Carla (Full Site) Workman, LTCP
LTC Insurance Advisors
Long Term Care Specialist
Tallahassee, FL
(850) 656-2433 Phone
carlaltc@comcast.net
www.ltcadvisor.info/carla


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State Taxes
"State Tax Deductions and Credits State Type Description"

State Tax Deductions and Credits State Type Description

Alabama Deduction
A state income tax deduction is allowed for individual taxpayers for the amount of premiums paid for a qualifying long term care insurance policy. Policies must be guaranteed renewable and coverage must be equal to or greater than 3 years of Medicaid coverage.

California Deduction
A deduction is allowed beginning in tax years on or after 1/1/97. The maximum amount deductible is based on a sliding scale, which is increased each year to account for inflation. Also, beginning intax year 2003, residents who need long term care services for at least 180 days can qualify for a $ 500 tax credit as long as their adjusted gross income does not exceed $ 100,000.

Colorado Credit
Beginning on or after January 1, 2000, a credit is allowed for long term care insurance premiums covering the taxpayer and taxpayer's spouse in an amount equal to 25 % of total premiums paid during the tax year, up to $ 150 for each policy. The credit is available to individual taxpayers with federal taxable income less than $ 50,000 or two individuals filing a joint return with taxable income less than $ 100,000.

Hawaii Deduction
Beginning after tax year 1998, Hawaii permits the same deduction as allowed under federal tax law for long term care insurance premiums. However, the Hawaii deduction is subject to 7.5 % of Hawaii adjusted gross income, instead of federal adjusted gross income.

Idaho Deduction
A deduction for 50 % of the premium cost for LTC insurance--to the extent the premium is not otherwise deducted or accounted for by the taxpayer for Idaho income purposes-- is allowed for tax years beginning on or after 1/1/2001.

Indiana Deduction
Beginning January 1, 2000, a deduction is allowed in an amount equal to the portion of any premiums paid during the taxable year by the taxpayer for a qualified long-term care policy for the taxpayer or the taxpayer's spouse, or both.

Iowa Deduction
A deduction is allowed for tax years beginning on or after January 1, 1997, for premiums for long term care insurance for nursing home coverage to the extent the premiums are eligible for the federal itemized deduction for medical and dental expenses.

Kentucky Deduction
A deduction from adjusted gross income is allowed for any amount paid during the tax year (for tax years beginning after 12/31/1997) for long term care premiums.

Maine (Also see below) Deduction
For tax years 1989 through 1999, Maine allowed a deduction to individual taxpayers for the full premium paid on long term care insurance policies certified by the Maine Insurance Department as complying with Title 24 A, Chapter 68. Beginning with tax year 2000, the state income tax deduction for individual taxpayers applies to premiums paid for federally tax-qualified long term care insurance policies and the deduction is limited to the extent the premiums are not claimed as an itemized deduction on the federal tax return.

Maine Credit For Employers
A credit is allowed against the tax imposed for each taxable year equal to the lowest of the following: (A) $ 5000; (B) 20 % of the costs incurred by the taxpayer in providing long term care policy coverage as part of the benefit package; or, (C) $ 100 for each employee covered by an employer provided long term care policy.

Maryland (Also see below) Credit
Maryland allows an individual to claim a one-time credit against state income tax for 100 % of the eligible federally qualified long term care insurance premiums, up to $ 500 for each insured over age 50. For those ages 41-50, the maximum credit is $ 470. For those less than age 40, the maximum credit is $ 250. The amount of the credit cannot exceed the state income tax for that taxable year and any unused credit for a taxable year cannot be carried over to any other taxable year. This credit may not be claimed if the individual was covered by long term care insurance at any time before July 1, 2000.

Maryland Credit
A credit is allowed against the state income tax for employers providing long term care insurance up to an amount equal to 5 % of the costs incurred by the employer during the taxable year for providing long term care insurance as part of the benefit package. The credit may not exceed $ 5000 or $ 100 for each employee covered by long term care insurance under the benefit package and applies to all taxable years beginning after 12/31/1998.

Minnesota Credit
A credit is allowed for long term care insurance premiums during the taxable year equal to the lesser of : (1) 25 % of premiums paid to the extent not deducted in determining federal taxable income; or (2) $ 100.

Missouri Deduction
Beginning January 1, 2000, Missouri taxpayers may deduct 50 % of all nonreimbursed amounts paid for qualified long term care insurance premiums to the extent such amounts are not included in itemized deductions.

Montana Deduction
Montana allows a deduction for the entire amount of qualified long term care insurance premiums covering the taxpayer, and the taxpayer's parents, grandparents and dependents.

Montana
Credit For taxable years beginning after 1998, a state income tax credit is allowed for "qualified elderly care expenses" paid by an individual for the care of a qualified family member. Premiums paid for long term care insurance coverage for a qualifying family member are included in qualified elderly care expenses. If a taxpayer takes this credit, they are prohibited from taking an additional income tax deduction for premium payments on the same policy for which the credit was taken.

New York Deduction
Premiums paid by New York State taxpayers for qualifying long term care insurance policies are tax deductible under New York State and New York City taxes to the same extent as allowed under federal law. In New York, this deduction is subtracted from the federal adjusted gross income and is not itemized under medical care. (Being repealed - see below).

New York Credit
Effective for tax years beginning on or after January 1, 2002, taxpayers will be permitted a credit for 20 % of the premium paid for qualifying long term care insurance premiums. This change corresponds with the repeal of the current deduction permitted for the payment of qualifying long term care premiums. To qualify for the credit, the taxpayer's premium payment must be for the purchase of a long term care insurance policy approved by the New York State Superintendent of Insurance. Employers who pay premiums for the purchase of approved long term care insurance policies on behalf of their employees are eligible for the credit. A tax payer is permitted to carry over to future tax years any credit amount in excess of the taxpayer's tax liability for the year.

North Carolina
Credit A credit is allowed for premiums paid on long term care insurance in an amount equal to 15 % of the premium costs the individual paid during the taxable year for the individual, spouse, or dependent. The creditmay not exceed $ 350 for each qualified long term care insurance contract for which a credit is claimed. The credit is not allowed if a federal deduction is allowed or if the premium is deducted from, or not included in, gross income. Credit expires for taxable years on or after 11/1/2004.

North Dakota Credit
A credit may be applied against an individual's tax liability in the amount of 25 % of any premiums paid by the taxpayer for long term care insurance coverage for the taxpayer or the taxpayer's spouse, parent, step-parent or child. The credit may not exceed $ 100 in any taxable year.

Ohio Deduction
For tax years beginning January 1, 1999, Ohio allows a deduction of federally qualified long term care insurance premiums, covering the taxpayer, the taxpayer's spouse and dependents, to the extent the deduction is not allowed in computing federal adjusted gross income.

Oregon Credit
For policies issued after January 1, 2000, Oregon allows a credit for amounts paid or incurred for long term care insurance by a taxpayer on behalf of the taxpayer, the taxpayer's dependents and parents and for amounts paid or incurred by an employer on behalf of employees. The credit is equal to the lesser of 15 % of premiums paid during the tax year or $ 500.

Utah Deduction
Beginning on or after January 1, 2000, Utah allows a deduction for long term care insurance premiums to the extent the amount paid for long term care insurance are not deducted in determining federal income tax.

Virginia Deduction
A deduction is allowed from federal adjusted gross income for taxable years beginning on and after January 1, 2000 for the amount an individual pays annually in premiums for long term care insurance, provided the individual has not claimed a deduction for federal income tax purposes.

West Virginia Deduction
West Virginia allows a deduction for premiums paid for a qualified long term care insurance policy that covers the taxpayer, the taxpayer's spouse, parent and dependents, to the extent the amount is not allowed as a deduction when calculating the taxpayer's federal adjusted gross income.

Wisconsin Deduction
A deduction is allowed for 100 % of the amount paid for a long term care insurance policy for the taxpayer and spouse to the extent the same deduction is not taken for federal income tax purposes. The deduction is allowable for tax years on and after January 1, 1998.

Find Out More...
HIPPA The Health Insurance Portability & Accountability Act (HIPAA) of 1996 (also known as the Kennedy-Kassebaum Bill), successfully addressed three items that affect long-term care insurance. Find here for more information...

Tax Qualified This section addresses the main differences between the tax qualified (TQ) and the non-tax qualified policies. Find here for more information...

Federal Legislation It's important to understand that you may qualify for federal deductions with your Long Term Care insurance. Find here to learn more...