Three Tax-Saving Tips for Seniors

 By Chris Orestis
Chris Orestis, executive vp
  1. Costs of senior living and long-term care: If you’re diagnosed as chronically ill, some long-term care expenses can be tax deductible. These expenses need to be more than 7.5 percent of a person’s adjusted gross income. “Chronically ill” are those who are diagnosed and under a certified care plan issued by a doctor or nurse that addresses your inability to perform two or more activities of daily living. Or you need to be suffering from cognitive impairments. Family members may also be entitled to tax deductions if they are financially contributing to the costs of care for a loved one and qualify as a dependent.
  2. Long-term care insurance premiums: Here owners of long-term care insurance policies can take tax deductions on premiums they pay for qualified plans – as well as other reimbursed medical expenses such as Medicare premiums – as long as the premiums are greater than 7.5 percent of adjusted gross income.
  3. Estate tax changes and life insurance: It is notable that many U.S. based large life insurance policies were purchased over the years as a wealth and legacy-preservation strategy to offset the impact of estate taxes. Prior to tax reform, the first $5,490,000 of income was exempt from the estate tax. Now that has been doubled to $11 million. That means policies currently in force to protect estates valued below the new level are no longer necessary. This presents a chance for the policy owner to sell the policy and recoup some or all of their premium payments under more advantageous tax conditions.
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