Partnerships

On Behalf of a Partner
A Partnership that purchases Tax-Qualified Long-Term Care Insurance on behalf of a Partner may deduct the premiums paid as an ordinary business expense. This holds true for Tax-Qualified Long-Term Care Insurance purchased for the Partner's spouse or other tax dependent.

On Behalf of an Employee
A Partnership that purchases Tax-Qualified Long-Term Care Insurance on behalf of an Employee may deduct the premiums paid as an ordinary business expense. This holds true for Tax-Qualified Long-Term Care Insurance purchased for the Employee's spouse or other tax dependent.

Tax Consequences of Partnership-Paid Premiums

For the Employee
Employer-paid Long-Term Care Insurance premiums would not be included in the Employee's gross income (IRC Sec. 106)

For a Partner
The entire amount of the Tax-Qualified Long-Term Care Insurance premiums paid by the Partnership is includable in the partner's gross income. The same holds true for partnership-paid Tax-Qualified Long-Term Care Insurance premiums paid on behalf of the Partner's spouse or other tax dependents. 

In this case, the partner is treated as a self-employed individual for tax purposes and the Tax-Qualified Long-Term Care Insurance premiums received would be subject to the same tax rules as apply to Sole Proprietors. 

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.

The information on this site is intended for informational purposes only and does not constitute legal advice. To comply with IRS rules, we must inform you that if this site contains advice relating to federal taxes, it was not intended nor written to be, and cannot be, used for the purpose of avoiding penalties that may be imposed under federal tax law. Under these rules, a taxpayer may rely on professional advice to avoid federal tax penalties only if that advice is reflected in a comprehensive tax opinion that conforms to stringent requirements under federal law.