Before meeting with me, many of my clients were not aware of the tax deductibility of long-term-care insurance. The good news is that long-term-care insurance premiums are tax-deductible, and the limits went up again this year. The Internal Revenue Service (IRS) considers tax-qualified long-term-care premiums a medical expense for individual taxpayers. How much you will save on your taxes largely depends on your age and what you do for a living. If you work for someone else and itemize your deductions, you can deduct your long-term-care premiums under medical expenses on Schedule A. For those of us who are self-employed, the tax advantages of a long-term-care policy jump-up sharply. You can deduct your long-term-care premiums under medical expenses directly on line 29 (“Self-employed health insurance deduction”) on Form 1040. For more information, go to: http://www.irs.gov/taxtopics/tc502.html
2013 LONG-TERM CARE INSURANCE
Per diem limitation for periodic payments received under qualified long-term care insurance contract or life insurance contract periodic payments treated as paid by reason of death of chronically ill individual under Code Section 7702B(d)(4) = $320
2013 LONG-TERM CARE PREMIUMS
Attained Age Before the Close of the Taxable Year
40 or less $360
More than 40 but not more than 50 $680
More than 50 but not more than 60 $1,360
More than 60 but not more than 70 $3,640
More than 70 $4,550
HERE’S MORE IMPORTANT 2013 INCOME TAX NUMBERS YOU NEED TO KNOW
The numbers presented in this “blog” issue are current at the time of its publication. As part of the American Taxpayer Relief Act (ATRA) passed in January 2013, many key tax rates, exemptions, and rules scheduled to be implemented in 2013 were changed. The following reflect the changes that were made by ATRA.
Deductible, Nondeductible, and Roth IRA Contribution Limits: IRC Sec. 219(b)(1)(A)
This is the limit in 2013 on how much can be contributed to an IRA: $5,500 (Indexed in $500 increments)
IRA Catch-Up Provision for Individuals 50 or Older by year end: IRC Sec. 219(a)(5)(b)
This is the amount that can be contributed for those 50 and older by year end. $6,500
The catch up is $1,000 in 2013. The listed number is the total amount that can be contributed.
2013 SOCIAL SECURITY TAX RATES
The 7.65% employee rate is imposed on the taxable wage base of $113,700 in 2013. 7.65% for Employers
Social Security Tax Rate (Self-Employed) = 15.30%
This is the percentage at which a self-employed individual is taxed for social security purposes.
2013 SOCIAL SECURITY BENEFITS
$2,533 Per Month (Age 66). Maximum Monthly Social Security Benefit at Full Retirement Age: For retirees born in 1942, full retirement age is 65 and 10 months; for those born in 1943 to 1954, it is 66. Full retirement age will gradually increase to age 67 for those born in 1960 and later.
*2013 PERSONAL INCOME TAX RATE SCHEDULES MARRIED INDIVIDUALS FILING JOINT RETURNS
Taxable Income Not over $17,850=Tax equaled to 10% of the taxable income
Over $17,850 but not over $72,500=Tax equaled to $1,785 plus 15% of the excess over $17,850
Over $72,500 but not over $146,400=Tax equaled to $9,982.50 plus 25% of the excess over $72,500
Over $146,400 but not over $223,050=Tax equaled to $28,457.50 plus 28% of the excess over $146,400
Over $223,050 but not over $398,350=Tax equaled to $49,919.50 plus 33% of the excess over $223,050
Over $398,350 but not over $450,000=Tax equaled to $107,768.50 plus 35% of the excess over $398,350
Over $450,000=$125,846 plus 39.6% of the excess over $450,000
*This is only a synopsis of the 2013 PERSONAL INCOME TAX RATE SCHEDULES and is not intended or written to be used, and cannot be used or relied upon, by any such taxpayer for the purpose of avoiding tax penalties. Any such taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor, or attorney.
2013 ESTATE PLANNING AMOUNTS
Annual Gift Tax Exclusion—Present Interests Code Sec. 2503= $14,000
GST EXEMPTION Code Sec. 2631 $5,250,000
Dollar Amount Used to Compute “2 Percent” Portion of 6166=$1,430,000
APPLICABLE ESTATE TAX EXEMPTION=$5.250,000
APPLICABLE GIFT TAX EXEMPTION=$5,250,000
DISCLAIMER: We are not in the business of providing tax or legal advice. These materials and any tax-related statements are not intended or written to be used, and cannot be used or relied upon, by any such taxpayer for the purpose of avoiding tax penalties. Any such taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor, or attorney.