This blog post is designed to provide general information on the subjects covered. It is not, however, intended to provide specific estate planning, insurance, tax or legal advice. Please note that LTC Consumer and its representatives do not give financial planning, tax or legal advice. You are encouraged to consult with your tax advisor or attorney concerning your own situation.

2017 Long Term Care Insurance Tax Deductions

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Tax season is upon us and we are getting down to the wire!  As you finish up your 2016 taxes, remember you may be eligible to participate in premium tax deductions in your state.

If you haven’t applied for and been approved for Long Term Care coverage, now is the time to get covered and enjoy the tax deductions you deserve in 2017.

The following is a brief overview of what you can look forward to in 2017. If you need more information about the rules in your state, review our 2017 LTCI Tax Guide.

Filing as an Individual

If you have an inforce tax-qualified Long Term Care insurance policy, you may be eligible for tax breaks on your premiums as a medical expense. If you itemize your federal income tax deductions, medical expenses are deductible up to certain limits based on your age.

When your combined medical expenses (qualified LTCI premiums and other medical expenses) exceed 10% of your Adjusted Gross Income (AGI), you may be eligible for a deduction. For 2016, if you were 65 or older, the threshold was 7.5% of your AGI.

ELIGIBLE LTCI PREMIUM GUIDELINES

Age before close of tax year
2016 Eligible LTCI Premium
2017 Eligible LTCI Premium
40 and under $390 $410
41-50 $730 $770
51-60 $1,460 $1,530
61-70 $3,900 $4,090
71 and over $4,870 $5,110

Your LTCI benefits should be tax-free if the benefits you receive for your qualified LTCI policy don’t exceed the greater of your qualified LTC daily expenses or the $360 per day 2017 limit (2016 limit was $340).

Filing as a Sole Proprietor (Self-Employed)

Sole proprietors can deduct 100% of the owner’s tax-qualified LTCI premiums according to the chart above. Self-employed business may also deduct premiums paid for their employees as a business expense. It’s unnecessary for a sole proprietor to meet the AGI threshold for individuals.

Filing as a Limited Liability Company (LLC)

Employer-paid LTCI premiums for employees are deductible as a general business expense. Members are taxed as self-employed individuals. LTCI premiums paid by the corporation should be included in a member’s AGI but they may deduct up to 100% of the age-based eligible premiums listed above.

Filing as an S-Corporation

S-Corp members who own over 2% of the corporation are taxed as self-employed individuals. LTCI premiums must be included in their income on their K-1. Premiums are 100% deductible according to the chart above and should be included in their AGI.

Filing as a C-Corporation

Employer-paid LTCI premiums for employees are 100% deductible as a business expense. Age-based eligible premium limits do not apply. Premiums paid by the employer should not be included in the employee’s income. Benefits received by the employee from their employer plan are non-taxable and shouldn’t be included in the employee’s AGI.

To learn more about 2017 tax incentives in your state, review pages 3-10 in our 2017 Tax Guide.

Are you ready to improve your tax deductions in 2017? Apply for LTCI coverage now to take advantage of 2017 LTCI premium expense. Run an LTCI quote for top carriers online with LTC Consumer’s free online quoting software.

LTC Consumer is an independent, free online service to help consumers understand what long term care insurance is, how it works, and how to evaluate coverage options. Our mission is to provide an educational, no-pressure resource for learning about long term care planning, with the opportunity to speak with specialists who can help them.

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