Whether you file your taxes as an individual, a self-employed individual, or a corporation, significant tax advantages for long term care insurance (LTCI) could save you money on your taxes.
Consider the following information for ways you can save.
2015 Tax Incentives by State
To encourage long term care planning, many states offer unique tax advantages for long term care insurance policy owners. Check out our 2015 Tax Guide to learn about the incentives available in your state.
Individuals may be eligible to receive tax breaks on the premiums paid for tax-qualified LTC policies. Tax laws allow these premiums to be considered a medical expense. When you itemize federal income tax deductions, medical expenses can be deductible to a specific amount based on your age.
|Age||Medical Expenses||Tax Deduction Eligibility|
|Under age 65||>10% of Adjusted Gross Income||You may be eligible|
|Age 65+||>7.5% of Adjusted Gross Income||You may be eligible|
The maximum LTCI premiums allowed to be included as a medical expense for 2015 are listed below.
|2015 LTCI Tax Deductions|
|Age before the close of the taxable year:||2015 Eligible LTCI Premium|
|40 and under||$380|
|71 and over||$4,750|
Self-Employed – Sole Proprietor
If you’re a sole proprietor, you can deduct 100% of your tax-qualified LTCI premiums based on your age in the charts above. In addition, you may be able to deduct premiums you pay for employees as a business expense. Self-employed individuals do not need to meet the Adjusted Gross Income (AGI) threshold for individuals.
Limited Liability Company (LLC)
LTCI premiums paid by the employer are deductible as a general business expense. LLC members are taxed as self-employed individuals (see above). LTCI premiums paid by the company are included in a member’s AGI. They may deduct up to the allowable amount in the table above.
Subchapter S-Corporation (S-Corp)
S-Corp members owning over 2% of the corporation are taxed as self-employed. LTCI premiums are included in their income and must be reported on their K-1. They may deduct up to the allowable amount in the table above and are included in the member’s AGI.
Tax-qualified premiums paid by the employer are 100% deductible as a business expense. Premiums paid for employees should not be included in the employee’s income. Tax-qualified LTCI plans given to employees by an employer are non-taxable and are not included in the employee’s AGI.
Don’t wait another year. See what the 2016 long term care insurance tax advantages can be with our updated 2016 Tax Incentive Guide. Start saving now with premium tax advantages for long term care insurance. Get an instant quote today.
This is not tax advice. Please consult your accountant for tax advice and information in your state.