Sole Proprietor
Deductibility of Employer-Paid Premiums
Sole Proprietors who purchase and pay for Tax-Qualified Long-Term Care Insurance policies
for themselves, their spouses and their tax dependents may claim a deduction
for the premiums paid as medical care expenses (IRC Sec. 162(l)(1)(A) and Sec.
213).
Prior to tax year 2003, only a percentage of the eligible Tax-Qualified Long-Term Care Insurance premiums paid by a self-employed individual were deductible as medical care expenses. However in tax year 2003 and thereafter, the full amount of the Tax-Qualified Long-Term Care Insurance premiums paid by the self-employed individual may be deducted (IRC Sec. 162(l)(1)(B). See the following table for more information.
Tax Year |
Applicable
Percentage of TQ LTCI Premium Deductible as Self-Employed Health Insurance |
2019 | 100% |
Further, as in the case of individual taxpayers, the amount of the Tax-Qualified Long-Term Care Insurance premiums that a self-employed individual may deduct as Self-Employed Health Insurance is subject to the following dollar limits.
Age | Eligible Premium 2019 Limit | Eligible Premium 2018 Limit |
40 and Younger | $420 | $420 |
41 - 50 | $790 | $780 |
51 - 60 | $1,580 | $1,560 |
61 - 70 | $4,220 | $4,160 |
71 and Older | $5,270 | $5,200 |
We do not provide tax or legal advice. Any decisions whether to implement these ideas should be made by the client in consultation with professional financial, tax, and legal counsel.