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Tax Incentives
Tax-Qualified (TQ) Long-Term Care (LTC)
Insurance Premiums and Benefits
(2004)
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The
C-Corporation that pays TQ LTC insurance premiums as employee benefits for bona fide employees
(including employees who are officers and/or stockholders), their spouses and their dependents
may deduct the full premium amount as a reasonable and necessary business
expense. IRC
Sec. 7702B(a)(3)
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Beginning
in 2003, new tax advantages became available for the self-employed, S-Corporations and partnerships
and their employees.
Consult with your tax advisor. IRC Sec. 162(1), 213(d), 162(1)(2)(C)
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TQ LTC insurance premiums
paid by a C-Corporation may be excluded from an employee's gross
income because TQ LTC insurance is treated as Accident and Health Insurance
for tax purposes. IRC Sec. 7702B(a)(3)
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TQ LTC
insurance claim benefits, which are paid for the actual LTC costs incurred, are generally income
tax-free. IRC Sec. 105(b), IRC Sec. 770B(a)(2), IRC Sec
7702B(d), IRC Sec. 213(d)(1)
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TQ LTC
insurance claim benefits, which are paid in cash to the policyholder without
regard to the actual LTC costs incurred, are excluded from income up to the
greater of (a) $230 per diem or (b) the
actual long-term care expenses incurred during this period.
The above
information is not intended to be legal or tax advice and is supplied for reference
purposes only. Consult with
your tax advisor.
Go to
Review of LTC
and Using LTC Insurance as an Asset Protection Vehicle.
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