Long,Term,Care,Insurance,Tax,D finance, share, loan Long Term Care Insurance Tax Deductions
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Long-term care insurance policies offer tax deductions to help individuals as well as business owners purchase affordable coverage and sustain their care. The tax deductible has been pursued by the government to resolve the financial stress on Medicaid and make most of the health care budget.LTC insurance is treated as medical expense under the Internal Revenue Services (IRS) tax code. However, there are guidelines or considerations in deducting tax on individual, self employed, and employer policies.Individual The premiums that are considered as medical expense are called eligible premium, as defined in the Internal Revenue Code 213(d). Usually, the tax deductions are based on the insureds age. Here are the recent tax deductions as of 2010:40 0r under the deduction limit is $330Over 40 but not more than 50 -- $620Over 50 but not more than 60 -- $1,230Over 60 but not more than 70 -- $3,290Over 70 -- $4,100For individual policy, the LTC expenses will be treated as deductible when they exceed 7.5% of the individuals Adjusted Gross Income (AGI). The amount that is beyond the eligible amount will not be acknowledged as medical expense. The eligible premiums on tax-qualified long-term care insurance can be carried over the individual and his or her spouse or any dependents. Self-EmployedSelf employed individuals can freely deduct 100% of out-of-pocket LTC premiums up to the eligible premium amount. Again, the amount that exceeds the Eligible Premiums is not counted as deductible. It is also not important to reach the 7.5 AGI to qualify for this deduction. However, a self-employed individual may not qualify for the deductions when he or she or his/her dependent has engaged in subsidized LTC plan (a plan wherein the employer pays full or half of the LTC premiums)Partnership, LLC and Subchapter S CorporationPartners in partnership, members of an LLC, ad shareholders or employees of Subchapter S Corporations with 2% shares in the company are all taxed as self employed individuals. Anyone who is engaged in the abovementioned business may deduct 100% of the Eligible Premium. It is also not crucial to achieve the 7.5% AGI threshold.If the employee or shareholder buys coverage under his or her name and not under the companys name, then the individual will not be considered as self-employed and should meet the 7.5 threshold like the individual deductions. Subchapter C CorporationWhen a company purchases tax-qualified policies on behalf of its employees and/or their dependents, the corporation is accredited for 100% deduction as a business expense on the total premiums paid. The deductions do not follow the requirements on the age caps of the eligible premiums. The employer can also select whom it covers.Moreover, there are two factors that may trigger the premiums to become tax deductible: the officers of the corporation and their length of service. There are tax rulings that the tax deduction should not put so much weight on the stock ownership. The Ten-Pay or Accelerated Premium plans can give generous tax deductions for the corporations and allows the owner to fully pay the long term care premiums.
Long,Term,Care,Insurance,Tax,D