Save money on long term care insurance premiums with business tax savings.
Many companies now offer long term care insurance as another valuable employee benefit. Premiums paid for tax-qualified long term care insurance are given tax-favored treatment.
C Corporation Long Term Care Insurance Tax Deductions
When a C-Corporation pays the premiums on long term care insurance for employees, their spouses, and qualified dependents, the company can generally deduct 100% of the premium paid as a reasonable business expense. Business owners are treated like any other employee when premiums are paid in relation to their capacity as an employee of the business. Employees don’t have to declare the premiums paid as income and long term care insurance benefits received will be tax free.
Shareholders – If a C-Corporation purchases a long term care insurance policy for a shareholder who is not otherwise an employee, no deduction is available to the C-Corporation and the premiums represent dividend income to the shareholder.
S-Corporation Long Term Care Insurance Tax Deductions
When an S-Corporation pays the premiums on behalf of owners of 2% or more of stock and employees, their spouses, and qualified dependents, the company can generally deduct 100% of the premium paid as a reasonable business expense. Owners of 2% or more of stock must declare employer-paid premiums paid for their long term care insurance as income, but they are then able to deduct eligible premiums on their individual tax returns. However there is no deduction allowed if the owner is eligible to participate in any other employer subsidized plan which includes coverage for long term care services including that of a spouse’semployer and other insurance. Employees don’t have to declare the premiums paid as income and long term care insurance benefits received will be tax free.
Sole Proprietor Long Term Care Insurance Tax Deductions
When a Sole Proprietor pays the premiums on behalf of employees, their spouses, and qualified dependents, the company can generally deduct 100% of the premium paid as a reasonable business expense. Sole Proprietors must declare employer-paid premiums paid for their long term care insurance as income, but they are then able to deduct eligible premiums on their individual tax returns. However there is no deduction allowed if the owner is eligible to participate in any other employer subsidized plan which includes coverage for long term care services including that of a spouse’semployer and other insurance. Employees don’t have to declare the premiums paid as income and long term care insurance benefits received will be tax free.
Partnership Long Term Care Insurance Tax Deductions
When a Partnership pays the premiums on behalf of partners for services rendered in a capacity as an employee, non-partner employees, their spouses, and qualified dependents, the Partnership can generally deduct 100% of the premium paid as a reasonable business expense. Partners must declare employer-paid premiums paid for their long term care insurance as partnership income, but they are then able to deduct eligible premiums on their individual tax returns. However there is no deduction allowed if the partner is eligible to participate in any other employer subsidized plan which includes coverage for long term care services including that of a spouse’semployer and other insurance. Employees don’t have to declare the premiums paid as income and long term care insurance benefits received will be tax free.
