New Limits for Long-Term Care Premium Deductibility Issued by IRS (updated for 2020)

For self-employed individuals, including LLC, PA, S-corporations and partnerships, the 2% or more owners of these entities can deduct 100% of the eligible (age indexed) LTCI premiums paid on their behalf, their spouses and dependents for Tax Qualified LTCI policies. Please refer to the age indexed chart below for eligible premiums. Premiums paid on behalf of non-owner employees, their spouses and their dependents for Tax Qualified LTCI policies are generally fully tax deductible as a reasonable business expense.

The eligible age indexed LTC premium amounts are:
Attained Age Before Close of Tax Year 2019 Tax Year 2020 Tax Year

40 or younger

41-50

51-60

61-70

71 and older

$420

$790

$1,580

$4,220

$5,270

$430

$810

$1,630

$4,350

$5,430

In regards to receiving LTCI benefits, benefits paid under a qualified LTCI plan are generally excluded from taxable income. The stated dollar amount of the per diem limitation (guaranteed tax free benefit, or reimbursed amount) is $380 for tax year 2020. In tax year 2019, the limit was $370.

For these adjustments, as well as other inflation adjustments made by the IRS, click here.

Learn more: To request our guide to Tax Breaks and Incentives, click here.

Newman Long Term Care and its respective associates and employees cannot provide legal, accounting, or tax advice or services. Thus, these educational tools are not intended to serve as the basis for any investment or tax-planning decisions. Please consult your attorney or tax professional.

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