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Deduct long-term care insurance

By Jennie L. Phipps · Bankrate.com
Sunday, October 23, 2011
Posted: 6 am ET

There are lots of good reasons to start a small business in retirement. Making a little money so you don't have to take as much out of your savings is one of them. But there are others.

I had lunch not long ago at a writers conference and sat next to a woman who was talking about the three books she was writing simultaneously. She said she had to schedule her time carefully so she had time to both golf and meet her deadlines.

My nosiness got the best of me, and I asked her how old she was. "Eighty-five," she said.

She's my hero. I intend to be her when I grow up.

Another retirement planning reason to start a small business is to help minimize what you have to give Uncle Sam.

Jesse Slome, executive director of the American Association for Long-Term Care Insurance, points out that "Tax advantaged long-term care insurance remains one of the few remaining significant tax-savings benefits especially meaningful for small business owners."

Thanks to the IRS response to the federal cost of living adjustment, the amount you can deduct as a business expense for long-term care insurance has risen to the levels below. Whether your business is buying long-term care insurance just for you or for you and your spouse, the ability to deduct the amount you pay can significantly reduce what LTC insurance actually costs out of pocket. And that makes doing a little writing on the side or selling used golf balls even more worthwhile.

Attained age before
close of taxable year
2012 deductible limits 2011 deductible limits
40 or less $350 $340
More than 40 but not more than 50 $660 $640
More than 50 but not more than 60 $1,310 $1,270
More than 60 but not more than 70 $3,500 $3,390
More than 70 $4,370 $4,420
Source: IRS Revenue Proceedure 2011-52 (2012 limits) and 2010-40 (2011 limits)

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1 Comment
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