Long term care insurance – tax benefits

Lesser taxes and long term care insurance go hand in hand. Most LTC policies sold today are tax qualified. Qualified insurance policies for long term care get favorable tax treatment. The IRS has declared that such policies can get tax deductions on premiums for a certain limit basis age. There are tax deductions offered on paid out premiums, expenses from personal money and benefit payments. This rule does not hold good for a policy that is not tax qualified. The deductibility of LTC insurance premiums for qualified policies is limited by the tax payer’s age taken into consideration at the end of the year and these limits are adjusted every year by the IRS considering the inflation rate.

In case you run your own business long term care insurance can give you a good deal in tax deduction. You may in fact be in a position to deduct all or 100% of the sum you pay for your medical/ dental/ qualified long tern care insurance for self, spouse and dependants. The insurance policy should be established under your business. Also you would need to fall into one of the below categories:

• A self employed person with net profits declared in Schedule C, C-EZ or F

• A partner with self employment net earnings declared on Schedule K-1 (form 1065), Box 14, Code A.

• A share holder who owns more than 2% of the outstanding stock of an S corporation; wages from the corporation declared on Form W-2