February 5, 2008

Can I deduct my Long Term Care Premiums?

Many individuals are still not sure whether or not they can deduct all or part of their Long Term Care (LTC) premiums. This summary is for the income tax treatment of Long Term Care policies for 2008. This information is for educational purposes and you should always consult your trusted adviser, tax or legal regarding your personal situation.

1. An Individual taxpayer that does not itemize - NO DEDUCTION

2. An Individual taxpayer that does itemize deductions - A)Deductible as " Health Insurance Premium", limited to the lesser of the actual premium or "eligible LTC premium" B)Deductible amount is Total medical Expenses, including eligible LTC premium, in excess of Adjusted Gross Income. IRC Section 213(a)

3. Self-Employed Taxpayers, including Sole proprietors, Partners, Member of LLC, 2% or greater shareholder of an S corporation. - A)Eligible for self-employed health insurance deduction, taken on IRS Form 1040. IRC Section 162 B)Limited to the lesser of actual premium paid or "eligible LTC premium" C) Deduction is NOT subject to 7.5% of Adjusted Gross Income threshold.

4. Non Owner Employees (Premiums paid by employer). Employer provided LTC insurance is treated as Accident and Health Plans. Section 7702(a)(3). A)Premiums deductible to employer (subject to reasonable compensation rules) Section IRC 162(a) B) Premium not included in employee's income.

Long Term care should be part of everyone's financial plan, especially individuals over age 40. Protect your life savings, assets and dignity. Look into a LTC policy today. Request more information