House Approves Deduction For Long-Term Care Insurance

By a vote of 362-61, the House of Representatives has approved a measure to provide an above-the-line tax deduction for long-term health care expenses, such as nursing home costs. Under current law such expenses are allowed as a tax deduction only to taxpayers who itemize deductions and then only to the extent that such expenses, combined with other deductible medical expenses, exceed 7.5% of the taxpayer's adjusted gross income.

It is estimated that the tax cut will provide $5.3 billion in savings to taxpayers over the next 10 years. Only taxpayers in lower tax brackets will qualify for the deduction. Individual taxpayers with adjusted gross income between $20,000 and $40,000, and married taxpayers who file jointly and whose adjusted gross income is between $40,000 and $80,000 will qualify for the deduction. The deduction, if made into law, will be phased in over 10 years.

It is the hope of the members of Congress that passage of this bill will encourage taxpayers to purchase private insurance and rely less on the federal Medicare and Medicaid programs. "If we don't put incentives in for individuals, our public funds will be depleted," said Representative J.D. Hayworth (R-AZ), sponsor of the bill.

Other provisions of the bill include a tax deduction for the care of a dependent in a taxpayer's home and expanded access to Archer Medical Savings Accounts (MSAs).

Dissenters of the bill, such as Representative Fortney Stark (D-CA) claim the bill is not designed to help taxpayers as much as it is designed to "bail out the insurance industry."

You may like these other stories...

Starting in October, the IRS will send warning letters to tax return preparers who appear not to be complying with Earned Income Tax Credit (EITC) due diligence requirements.Section 6695(g) of the Internal Revenue Code...
BKD LLP adds Illinois accounting firm Wolf & Co.Springfield, Missouri-based CPA and advisory firm BKD LLP and Chicago-based accounting firm Wolf & Co. have agreed to merge, the firms announced on Monday. Wolf will...
A new government report on Monday found that the IRS may not be completing the required research steps in collecting delinquent taxes before considering the cases “not collectible.”The Treasury Inspector General...

Already a member? log in here.

Upcoming CPE Webinars

Oct 9In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards.
Oct 15This webinar presents the requirements of AU-C 600, Audits of Group Financial Statements (Including the Work of Component Auditors).
Oct 21Kristen Rampe will share how to speak and write more effectively by understanding your own and your audience’s communication style.
Oct 23Amber Setter will show the value of leadership assessments as tools for individual and organizational leadership development initiatives.