Dwayne K. Dowell, CPA/PFS, CLTC

9900 Corporate Campus Drive

Suite 3000

Louisville KY 40223

Phone 502.657.6428 Fax 800.899.0084

dkdowell@dkdcpa.com

www.dkdcpa.com

www.dkdcpablog.com

           

PRESS RELEASE - FOR IMMEDIATE RELEASE

 

Dwayne K Dowell CPA/PFS is pleased to announce being conferred as

 

• Kentucky’s First Veteran’s Administration Accredited Claims Agent

 

Dwayne will be specializing in educating and helping veterans, members of a veteran's family, or the surviving spouse of a veteran understand how to obtain long term care benefits from the Department of Veterans Affairs. Most veterans are not aware of the benefits available through veteran’s health care, through state veteran’s homes, through home renovation grants, or for two disability income programs called Compensation and Pension.

Founder of National Care Planning Council and author of three books on Veterans Benefits, Thomas Day states, “It's astounding that roughly 1/3 of all seniors can qualify for up to $1,949 a month in additional income through Pension under the right conditions. Yet government statistics shows only 5% of potentially eligible veterans are actually receiving the Pension benefit.”

The Aid & Attendance Benefit can help you pay anyone including your child for home care. It can also be used to help you pay for professional care in the home, for assisted living, or for nursing home. Imagine having an extra $1,949 a month that you didn't even know existed. 

In addition to being a Certified Public Accountant/Personal Financial Specialist, Dowell is a Chartered Retirement Planning Counselor and Certified in Long Term Care.  “I am very excited about getting my accreditation and look forward to working with Veterans on their needs. “ 

For further information contact Dwayne K Dowell at (502) 657-6428 or e-mail at dkdowell@dkdcpa.com

Long-term care can be very expensive, but many long-term care expenses can be deducted from your taxes. Two important recent decisions by the U.S. Tax Court provide guidance on when caregiving services are deductible. In one decision, the court ruled that payments to non-medical caregivers are still deductible as medical expenses; in the other, the court held that a written agreement is required in order for a deceased woman's estate to deduct more than $1 million in care that her son allegedly provided her.

In the first case, Estate of Lillian Baral (U.S. Tax Ct., No. 3618-10, July 5, 2011), Lillian Baral suffered from dementia and her doctor recommended that she get 24-hour-a-day care. Her brother hired caregivers to assist Ms. Baral with daily activities. On her tax return, Ms. Baral included a deduction for medical expenses for the payments to the caregivers. The IRS said the expenses were not deductible and asked for more money. Following Ms. Baral's death, her estate appealed the matter to the U.S. Tax Court.

Under tax law, expenses for medical care may be claimed as an itemized deduction if they exceed 7.5 percent of adjusted gross income. (Note that this threshold will rise to 10 percent of adjusted gross income in 2012.) The definition of medical expenses includes the cost of long-term care if a doctor has determined you are chronically ill. "Chronically ill" means you need help with activities like eating, going to the bathroom, bathing, and dressing, or you require substantial supervision due to a severe cognitive impairment.

The Tax Court agreed with Ms. Baral that the payments to the caregivers for assisting and supervising Ms. Baral are deductible medical expenses. The expenses qualified as long-term care services even though the caregivers were not medical personnel because a doctor had found that the services provided to Ms. Baral were necessary due to her dementia.

In the second case, Estate of Olivo v. Commissioner (U.S. Tax Ct., No. 15428-07, July 11, 2011), New Jersey resident Anthony Olivo provided nearly full-time care to his mother from 1994 to 2003, during which time he largely abandoned his practice as an attorney. After his mother died, Mr. Olivo became administrator of her estate.

Mr. Olivo filed a tax return for the estate and claimed a deduction of $1.24 million as a debt he said the estate owed him for the care he had provided his mother over the years. He claimed he had an oral agreement with his mother that after she died she would compensate him for his services. The IRS disallowed the deduction and Mr. Olivo filed a petition with the Tax Court.

If you converted a traditional IRA to a Roth IRA in 2010, and your Roth IRA has sustained losses as a result of the recent market downturn, you may want to consider whether it makes sense to undo (recharacterize) your conversion. You have until October 17, 2011, to undo your 2010 conversion. (If you've already filed your federal income tax return for 2010, you'll need to file an amended return if you recharacterize.) A recharacterization can help you avoid paying income tax on the value of IRA assets that have been lost in the downturn. When you recharacterize, your conversion is treated for tax purposes as if it never happened. For example, assume you converted a fully taxable traditional IRA worth $100,000 to a Roth IRA in 2010. However, due to the recent market volatility, that Roth IRA is now worth only $60,000. If you don't undo the conversion you'll pay federal (and possibly state) income tax on $100,000, even though the current value of those assets is only $60,000. If you undo the conversion, you'll be treated for tax purposes as if the conversion never happened, and you'll wind up with a traditional IRA worth $60,000--and no resulting tax bill. Conversions made in 2010 present special planning issues. A one-time rule gives you the option of including all of the income from your 2010 conversion on your 2010 federal tax return, or reporting half of the income in 2011 and the other half in 2012. If you recharacterize, you'll lose the ability to utilize this special deferral rule. If you recharacterize your 2010 conversion, you're allowed to convert those dollars (and any earnings) to a Roth IRA again ("reconvert") but you'll have to wait 30 days, starting with the day you transferred the Roth dollars back to a traditional IRA. Keep in mind that even though the amount you recharacterized, and any earnings, is subject to a 30-day waiting period, any additional amounts in your traditional IRAs are not subject to the waiting period, and you can convert all or part of those dollars to a Roth IRA at any time. If you reconvert in 2011, then all taxes due as a result of the conversion will be included on your 2011 federal income tax return. (You can also recharacterize a 2011 Roth conversion. However, the deadline for doing so isn't until October 17, 2012. If you recharacterize a 2011 conversion, you cannot reconvert those dollars until January 1, 2012, or, if later, 30 days following the recharacterization.) Of course, the current market downturn also presents an opportunity to convert additional traditional IRA assets to a Roth at a potentially lower tax cost than just a few months ago. Whether it makes sense to recharacterize your Roth conversion depends on several factors, including the extent of the losses in your Roth IRA, the potential value of the special 2010 tax deferral rule to you, and your expectations of where the markets may be headed. Your financial professional can help you decide if a recharacterization is right for you.

Please e-mail me at dkdowell@dkdcpa.com if you have any questions. 

The U.S. Government Accountability Office (GAO) reports that financial experts typically recommend that middle-net-worth retirees use a portion of their savings to buy an income annuity (immediate annuity) to help meet necessary retirement expenses. The report, Ensuring Income throughout Retirement Requires Difficult Choices, finds that while Social Security continues to be the primary source of fixed income in retirement, it is not enough to meet the income needs of most retirees. Also, the shift from employer-sponsored defined benefit pension plans to defined contribution plans, coupled with increasing life expectancies, is forcing retirees to assume more responsibility for managing their savings to ensure that they have sufficient income throughout retirement. An income annuity is an alternative to self-managing savings that offers retirees a steady source of income they won't outlive.

Why income annuities?

Generally, an income annuity, also referred to as an immediate annuity, is issued by an insurance company. It is typically purchased with a single lump sum of money (premium) paid to the issuer in exchange for payments made for life (single life income annuity), or for the joint lives of the annuity owner and his or her spouse or partner (joint and survivor income annuity). Payments generally begin no later than one year from the date the issuer receives the premium. The GAO report suggests income annuities:

• Help protect retirees against the risk of underperforming investments
• Help protect retirees against the risk of outliving their savings (longevity risk)
• Help relieve retirees of the task of managing their investments at older ages when their capacity to do so may be diminished, and
• Provide a base of guaranteed income that may serve as a dependable "cushion" for retirees who might otherwise spend too little for fear of outliving their assets (guarantees are subject to the claims-paying ability of the annuity issuer)

Why income annuities may not work

Income annuities aren't for everyone nor do they work in every situation. Particularly, income annuities may not be appropriate for people:

• With predictably shorter-than-normal life expectancies
• Who have limited savings, since the funds used to purchase income annuities generally are not available to cover large, unanticipated expenses
• Who are concerned about income taxes, since the income from annuities purchased with nonqualified funds is typically taxed as ordinary income, whereas some or all of the investment return on liquidated savings in stocks, bonds, or mutual funds may be taxed at lower capital gains or dividend tax rates
• Who want to provide a bequest of their assets at their death

When might an income annuity be appropriate?

The GAO study describes examples when an income annuity may be appropriate. In one scenario, the study suggests that a household with a total net wealth of $350,000 to $370,000, of which $170,000 to $190,000 is savings (and which does not have a defined benefit pension plan), should consider purchasing an income annuity with a portion of their savings. Retirees with defined benefit pension plans should consider an income annuity option rather than taking a lump-sum rollover to an IRA. Conversely, an income annuity may not be as useful for households with significantly greater net wealth or those households with appreciably less net wealth.

Proposals to access annuities and increase financial literacy

Typically, defined contribution plan sponsors do not offer account holders income annuities as an option. In response, the study makes several recommendations to promote the availability of income annuities for defined contribution plan distributions. These proposals include legislation that would require plan sponsors to offer income annuities as a choice to plan participants, or set income annuities as the default election for plan participants when accessing defined contribution plan benefits. The study also recommends options aimed at improving individuals' financial literacy, particularly concerning the risks and available choices for managing income throughout retirement.

Report recommendations

The report seeks to offer options to retirees on how to have an adequate income throughout retirement. Generally, the study suggests that middle-income retirees should consider delaying Social Security retirement benefits at least until full retirement age, consider working longer, draw down savings systematically and strategically (typically at an annual rate of between 3% and 6%), elect an annuity instead of a lump sum withdrawal for employer-sponsored defined benefit plans, and for retirees who don't have a defined benefit plan, purchase an income annuity with some of their savings. To view the report in its entirety, go to (www.gao.gov/new.items/d11400.pdf).

If you have any questions, please contact me at dkdowell@dkdcpa.com

Transfer on Death (TOD) Designation: Will Substitutes

Definition

By making a transfer on death (TOD) designation for securities (like individual stocks and bonds, mutual funds, or trading accounts), you will transfer ownership of those securities immediately at your death to the person you designated.

Prerequisites

• You want to avoid the expense, delay, and disruption of probate
• You live in a state that authorizes transfer on death designations

Key Strengths

• Avoids expense and delay of probate

Key Tradeoffs

• Does not avoid estate taxes
• Only passes assets registered as TOD outside of probate

Variations from State to State

• Not available in all states

How Difficult Is It to Implement?

• Simple and inexpensive to create

If you have any questions, please do not hesitate to contact me at dkdowell@dkdcpa.com

What is long-term care insurance (LTCI)?

Long-term care insurance (LTCI) is a contractual arrangement that pays a selected dollar amount per day for a selected period of time for skilled, intermediate, or custodial care in nursing homes and other settings (such as home health care). Because Medicare and other forms of health insurance do not pay for custodial care, many nursing home residents have only three alternatives for paying their nursing home bills: their own assets (cash, investments), Medicaid, and LTCI. For information about Medicare and other government programs that cover only a limited amount of long-term care expenses, see Coordination with Government Benefits.

In general, long-term care refers to a broad range of medical and personal services designed to provide ongoing care for people with chronic disabilities who have lost the ability to function independently. The need for this care arises when physical or mental impairments prevent one from performing certain basic activities, such as feeding, bathing, dressing, transferring, and toileting--activities known as ADLs ("activities of daily living"). For more information about these activities, see Long-term Care Insurance (LTCI) Provisions. For details about places where you might receive long-term care, see Types of Long-term Care. For information about different kinds of LTCI policies and places where you might purchase them, see Types of Long-term Care Policies.

Long-term care may be divided into three levels:

• Skilled care--continuous "around-the-clock" care designed to treat a medical condition. This care is ordered by a physician and performed by skilled medical personnel, such as registered nurses or professional therapists. A treatment plan is created, and it is usually contemplated that the patient will recover at some point.
• Intermediate care--intermittent nursing and rehabilitative care provided by registered nurses, licensed practical nurses, and nurse's aides under the supervision of a physician.
• Custodial care--care designed to help one perform the activities of daily living (such as bathing, eating, and dressing). It can be provided by someone without professional medical skills, but is supervised by a physician.

How is it useful as a protection planning tool?

The risk of contracting a chronic debilitating illness (and the resulting catastrophic medical bills incurred) is considered by many to be one type of risk best passed on to an insurance company through the purchase of a LTCI policy.

A number of factors can increase your risk of requiring long-term care in the future. Naturally, your health status affects your likelihood of incurring a long stay in a nursing home. Indeed, people with chronic or degenerative medical conditions (such as rheumatoid arthritis, Alzheimer's disease, or Parkinson's disease) are more likely than the average person to require long-term nursing home care. And because women usually outlive the men in their lives, women stand a greater chance of requiring long-term nursing home care. However, if you already have a primary caregiver (like a spouse or child), your likelihood of needing a long stay in a nursing home will be less, particularly if you're a man. Because the cost of long-term care can be astronomical and may exhaust your life savings, purchasing LTCI should be considered as part of your overall asset protection strategy.

Example(s): Sue is a 75-year-old widow with two children, John and Jill. Sue owns her condominium apartment and has $200,000 in liquid assets. After enjoying independence much of her life, Sue suffered a stroke and now needs help with such things as bathing, dressing, and eating. John and Jill look into home health care and discover that it will cost $1,500 per week (or $78,000 per year). The money that Sue had hoped to pass on to her children will instead be spent on expenses that may otherwise have been covered by an LTCI policy.

How much does it cost?

Although purchasing LTCI seems to be the easy answer to the problem of escalating long-term care costs, the premiums for LTCI can be, depending on benefit levels selected, quite expensive.

Your yearly premium for an LTCI policy depends on a number of considerations, including your age when you purchase the policy, your health, the length of the coverage period (for instance, three years, five years, or lifetime benefits), the amount of the daily benefit provided, and whether you purchase inflation protection. When buying an LTCI policy, you must also consider not only whether you can afford to pay the premiums now but also whether you'll be able to continue paying premiums in the future, when your income may be substantially decreased. For more information about the cost of LTCI and examples regarding how Medicare and Medigap may help defray some of the costs, see Coordination with Government Benefits.

Who should purchase LTCI?

During the "golden years," when income typically declines, the purchase of LTCI should be carefully considered. People with significant discretionary income and substantial resources to protect for spouses, children, and other loved ones should seriously consider purchasing LTCI. Individuals with modest resources (e.g., less than $50,000 net worth) may find the premiums unaffordable, and may qualify for Medicaid by spending down their assets and/or engaging in a little Medicaid planning.

How much coverage is enough?

Insurance protects against an event that might happen in the future. Therefore, buying enough protection is important, but affordability must also be considered. In terms of cost, you need to consider the amount of the daily benefit you want to purchase and also the length of the benefit period.

• Daily benefit--Most policies will let you choose your amount of coverage, typically running anywhere from $40 to $150 or more per day. Of course, the greater the daily benefit and the longer the benefit period, the more the policy will cost. Also, note that the cost of nursing home care varies greatly from one metropolitan area to another, so you need to know where you'll be living out the remainder of your years. Certainly, it wouldn't make sense to purchase a policy with a daily benefit of $40 if the average daily cost of nursing homes in your area is $250 per day--unless, of course, you have substantial resources and plan to use some of your own income to pay for care. Consumers should generally buy enough coverage to cover 50 to 100 percent of nursing home costs. If you don't plan on using your own income to supplement, you should buy enough insurance to cover 100 percent of the nursing home costs.
• Length of benefit period--When purchasing LTCI, you'll be asked to select a benefit period. Benefit periods generally range from one to six years, with some policies offering a lifetime benefit. You'll want to choose the longest benefit period you can afford. If you can't afford a lifetime benefit, consider choosing a benefit period that coordinates with the look-back period for Medicaid (five years). For more information about ineligibility periods, see Look-Back Period for Medicaid.

Tip: The Deficit Reduction Act of 2005 gave all states the option of enacting long-term care partnership programs that combine private LTCI with Medicaid coverage. Partnership programs enable individuals to pay for long-term care and preserve some of their wealth. Although state programs vary, individuals who purchase partnership-approved LTCI policies, then exhaust policy benefits on long-term care services, will generally qualify for Medicaid without having to first spend down all or part of their assets (assuming they meet income and other eligibility requirements). Although partnership programs are currently available in just a few states, it's likely that many more states will offer them in the future.

How do you compare policies and providers?

Unfortunately, LTCI policies are not standardized. Provisions contained in policies vary greatly, and premiums charged vary as well. Therefore, you should compare policies to obtain the best amount and combination of benefits for your premium dollars.

• To compare policies, you should obtain sample policies and "Outlines of Coverage" from each carrier you are considering. The Outline of Coverage summarizes the policy's benefits and highlights the policy's important features. You need to read the policies carefully, ensuring that you understand each provision. There are a number of factors you should be concerned about, such as inflation protection, a full range of care (including home health care), exclusions for pre-existing conditions, and the amount of the daily benefit provided. For a description of the types of provisions typically contained in an LTCI contract, see Long-term Care Insurance (LTCI) Provisions.
• To compare providers, you should check out the financial strength of the companies by reviewing their A. M. Best Company's ratings along with the opinions of other rating services. You can also review the company's financial statements. For more information, see Comparing and Replacing Long-term Care Insurance (LTCI) Policies.

What are the tax ramifications?

If you purchase a "qualified" LTCI policy, part (or all) of the premiums you pay pursuant to the contract may be deductible on your federal income tax return. LTCI polices issued after January 1, 1997, must meet certain federal standards to be considered qualified. However, LTCI policies issued prior to January 1, 1997, that met the long-term care insurance requirements of the state in which the contract was issued are automatically considered qualified. For more information, see Taxation and Long-term Care Insurance (LTCI).

If you have any questions, please contact me at dkdowell@dkdcpa.com

Consider a Medical Reimbursement Plan

 

 

Are you looking to rein in out-of-control health care costs? If so, you may want to consider a Section 105 Medical Expense Reimbursement Plan.

 

Can you legitimately employ your spouse to help manage your business, farm, or rental real estate? If so, you can hire them, establish the plan, and reimburse them for all medical expenses they incur for themselves, their spouse (you!), and their dependents. (If you're not married and you operate your business as a C-corp, you can establish the plan for yourself.)

 

You don't even have to pay them a salary. You can pay them in benefits only (and avoid managing a payroll) so long as you follow a few simple formalities and the reimbursements are “reasonable compensation” for the work your spouse performs.

 

Once you’ve established the plan, you can deduct all your medical bills:

 

·         Major medical, long-term care, and “Medigap” insurance premiums,

·         Co-pays, deductibles, and prescriptions,

·         Dental care, vision care, and chiropractic care,

·         “Big ticket” expenses like LASIK surgery and braces for your kids’ teeth,

·         Even non-prescription medical expenses and supplies!

 

There’s no statutory limit on how much you can reimburse. And there’s no need to pre-fund expenses as there is with “flexible spending” (use-it-or-lose-it) and health savings accounts.

 

The National Association for the Self-Employed reports that the average plan sponsor saved $3,800 in 2005. Call us at 502.657.6428 to discuss a plan for you!

 

Dwayne K Dowell, CPA/PFS

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.

If you have any questions, please do not hesitate to contact me at dkdowell@dkdcpa.com