If you are small business owner, you may not want to overlook this tax benefit!
Have you paid for long term care premium?
That could be 100% tax deductible if you are business owner.
For taxpayers who are employed, they can’t deduct it unless their medical expense is over 10% of adjusted gross income. That means the chance to deduct it is slim.
However, IRS wants to give you , as a small business owners, a bigger tax break.
Instead of going through the floor of 10% of adjusted gross income, they allow you to deduct as business expense as long as the long term care plan does not have any cash surrender value.
If your business is under C-corporation, you can deduct the premium as business expense. The good news is you don’t need to offer it to other employees if you do not want to. Discrimination rule does not apply.
If you are running as S-Corp, treat this insurance as same as health insurance by reporting it in W-2.
For LLC and sole proprietorship, you will need to deduct the premium under adjustment of income of form 1040. There is limit to the amount you can deduct based on your ages. You can refer the table for 2016 at the site below:
http://www.aaltci.org/news/long-term-care-insurance-association-news/irs-increases-2016-tax-deduction-limits-for-long-term-care-insurance
Long term care may be important to you. It may help you cover the financial consequences in case of chronic illness or disabilities. Evaluate the after-tax cost of it and see if it financially makes sense to you.
Leave a Reply