Long Term Care Planning Advisors, LLC
Tax Treatment of LTC Premiums
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Federal Income Tax Treatment

Summary at a glance

 

 

Sole Proprietorship

C Corporation

S Corporation

Partnership

LLC

Tax treatment of

premiums paid

for employees

 

Fully deductible to entity, not

taxable to employee

Fully deductible to entity,

not taxable

to employee

Fully deductible to entity, not taxable to

employee

Fully deductible to entity, not

taxable to

employee

Fully deductible to entity,

not taxable

to employee

Tax treatment of

premiums paid for

owner/employees

 

Eligible premium

deductible above the

line

Fully deductible to entity,

not taxable

to employee

>2% of owner –

eligible premium

deductible above the

line*; all others fully

deductible to entity, not

taxable to employee

Eligible premium

deductible above

the line*

Eligible premium

deductible above

the line*

Premium paid by

Sole Proprietor

Corporation

Corporation

Partnership

LLC

Reported as income to

employee/owner

 

N/A

N/A

W-2 wages to >2%

owner

Schedule

K-1,

guaranteed income

Reporting depends on

whether elected Corp. or

Partnership status

Tax treatment of

premiums paid for

employee’s spouse

 

Fully deductible to entity, not

taxable to

employee

Fully deductible to entity, not

taxable to

employee

Fully deductible to entity, not

taxable to

employee

Fully deductible to entity, not

taxable to

employee

Fully deductible to entity,

not taxable

to employee

Tax treatment of

premiums paid for spouse as a

dependent of

owner/employee

Eligible premium

deductible above

the line*

Fully deductible to entity, not

taxable

to employee

>2% of owner –

eligible premium

deductible above the

line*; all others fully

deductible to entity, not

taxable to employee

Eligible premium

deductible above

the line*

Eligible premium

deductible above

the line*

 

 

 

 

 

 

 

*  Above the line – treated as an adjustment to gross income on the Individual Income Tax Return, Form 1040 (i.e., before itemized deductions)

                                                                                 Long-Term Care Planning Advisors, LLC

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