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December 03, 2003 at 07:00 PM
NU Online News Service, Dec. 3, 2003, 11:53 a.m. EST – The Internal Revenue Service has announced the new, inflation-adjusted amounts for certain items needed for computing 2004 federal income taxes.[@@]
The changes, described in Revenue Procedure 2003-85, affect the tax breaks for long term care insurance premiums and Medical Savings Accounts as well as the annual gift tax exclusion.
- LTC insurance premiums: The federal government lets taxpayers deduct a portion of individual LTC premiums from taxable income, but only if taxpayers spend enough on health care to itemize their medical expenses.
Here are the increases in the amount of eligible LTC premiums that taxpayers can include in itemized medical care expenses:
| Attained age |
2004 Limit |
2003 Limit |
| 40 or less |
$260 |
$250 |
| 41-50 |
$490 |
$470 |
| 51-60 |
$980 |
$940 |
| 61-70 |
$2,600 |
$2,510 |
| Over 70 |
$3,250 |
$3,130 |
- LTC insurance payments: The daily limit on periodic payments received under a qualified LTC insurance contract has increased to $230, from $220.
- MSAs: For taxpayers who have MSAs, the range of deductibles for health plans that fit the government’s definition of “high deductible health plan” will be $1,700 to $2,600 for self-only coverage and $3,450 to $5,150 for family coverage.
