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
2018
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 2018 Limit Eligible Premium 2017 Limit
40 and Younger
$420
$410
41 - 50
$780
$770
51 - 60
$1,560
$1,530
61 - 70
$4,160
$4,090
71 and Older
$5,200
$5,110

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.

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