2011 OPOA Dues – $1,782

Additional tax information:

Long-Term Care

You can include in medical expenses amounts paid for qualified long-term care services and premiums paid for qualified long-term care insurance contracts.
Qualified Long-Term Care Insurance Contracts

A qualified long-term care insurance contract is an insurance contract that provides only coverage of qualified long-term care services. The contract must:

1. Be guaranteed renewable,

2. Not provide for a cash surrender value or other money that can be paid, assigned, pledged, or borrowed,

3. Provide that refunds, other than refunds on the death of the insured or complete surrender or cancellation of the contract, and dividends under the contract must be used only to reduce future premiums or increase future benefits, and

4. Generally not pay or reimburse expenses incurred for services or items that would be reimbursed under Medicare, except where Medicare is a secondary payer, or the contract makes per diem or other periodic payments without regard to expenses.

The amount of qualified long-term care premiums you can include is limited. You can include the following as medical expenses on Schedule A (Form 1040).

1. Qualified long-term care premiums up to the amounts shown below.

a. Age 40 or under – $340.

b. Age 41 to 50 – $640.

c. Age 51 to 60 – $1,270.

d. Age 61 to 70 – $3,390.

e. Age 71 or over – $4,240.

2. Unreimbursed expenses for qualified long-term care services.

Note. The limit on premiums is for each person.

Also, if you are an eligible retired public safety officer, you cannot include premiums for long-term care insurance if you elected to pay these premiums with tax-free distributions from a qualified retirement plan made directly to the insurance provider and these distributions would otherwise have been included in your income.

Here is some information related to Legal Defense premiums…..
Deductions Subject to the 2% Limit

You can deduct certain expenses as miscellaneous itemized deductions on Schedule A
(Form 1040). You can claim the amount of expenses that is more than 2% of your adjusted gross income. You figure your deduction on Schedule A by subtracting 2% of your adjusted gross income from the total amount of these expenses. Your adjusted gross income is the amount on Form 1040, line 38.

Generally, you apply the 2% limit after you apply any other deduction limit. For example, you apply the 50% (or 80%) limit on business-related meals and entertainment (discussed in chapter 26) before you apply the 2% limit.

Deductions subject to the 2% limit are discussed in the three categories in which you report them on Schedule A (Form 1040).

· Unreimbursed employee expenses (line 21).

· Tax preparation fees (line 22).

· Other expenses (line 23).
Unreimbursed Employee Expenses (Line 21)

Generally, the following expenses are deductible on Schedule A (Form 1040), line 21.

You can deduct only unreimbursed employee expenses that are:

· Paid or incurred during your tax year,

· For carrying on your trade or business of being an employee, and

· Ordinary and necessary.

An expense is ordinary if it is common and accepted in your trade, business, or profession. An expense is necessary if it is appropriate and helpful to your business. An expense does not have to be required to be considered necessary.

Examples of unreimbursed employee expenses are listed next. The list is followed by discussions of additional unreimbursed employee expenses.

· Business bad debt of an employee.

· Education that is work related. (See chapter 27.)

· Legal fees related to your job.

· Licenses and regulatory fees.

· Malpractice insurance premiums.

· Medical examinations required by an employer.

· Occupational taxes.

· Passport for a business trip.

· Subscriptions to professional journals and trade magazines related to your work.

· Travel, transportation, entertainment, and gifts related to your work. (See chapter 26.)
Business Liability Insurance

You can deduct insurance premiums you paid for protection against personal liability for wrongful acts on the job.
Damages for Breach of Employment Contract

If you break an employment contract, you can deduct damages you pay your former employer that are attributable to the pay you received from that employer.