Deduct Your Long Term Care Insurance Premiums - Pay Through Your Business
One of the most effective ways to save on long term care insurance is to take advantage of the tax savings afforded to tax-qualified long term care insurance policies.
As an individual, you can deduct the premium that exceeds 10% of your Adjusted Gross Income (AGI) up to your age-indexed amount. The nice part is that programs like Turbo Tax easily recognize this and will make the proper calculation for you. Of course, your CPA or professional tax-preparer will as well.
But here's the challenge...what if your premium does not exceed 10% of your AGI? If you own a business, and pay your premiums through that business, a separate set of rules apply and you can more easily take advantage of the tax benefits.
Pay Through Your Business
Here's how it works for most smaller businesses. This covers pass-through entities like S-Corps, LLC's as well as Partnerships. By paying your tax-qualified LTC Insurance premiums through your business, you'll benefit in several ways:
- Your premiums will be deductible as a business expense
- Your premiums will not be subject to payroll taxes
- You will not be subject to the 10% threshold in order to deduct
There are different rules for each type of business entity and you can learn more by downloading our free tax guide. Many states also offer tax savings for the purchase of long term care insurance. These too can be found in our free guide.
The details do matter, and we're not tax professionals, so you should always consult one to see if your situation could benefit by paying through your business versus out-of-pocket. That said, a tax savings is money straight into your pocketbook that offsets the cost of coverage.
We suggest you consult a properly trained long term care insurance agent to guide you to the most tax-advantaged solution that meets your needs.