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State refunds possible for long-term care insurance holdersPosted On Thu, February 25, 2010
While death and taxes may be the only certainties in life, some may not know that protecting against the former with certain insurance policies may be able to reap rewards from the latter in terms of sizable state and federal deductions this tax season.
For the upcoming tax season, policy holders of long term care insurance plans may be able to receive federal deductions of up to nearly $4,000 based on their age.
However, in addition to federal savings, a survey from the Kaiser Family Foundation in 2008 found that 30 states offered some form of state tax deductions as well.
According to Gene Cutler, a New York-based agent for LTC Financial Partners LLC, the state deductions can be in the range of 20 percent of the premiums that were paid that year, doubling a refund in some cases.
“If you can double your money, so to speak, why not do it," said Cutler. "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."
While Federal deductions for long-term care insurance holders max out at $3,980 for policy holders older than the age of 70, those who are under 40 can still qualify for a refund of $320 in addition to any state refunds.
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