Author: Leon Clinton

Long-term care insurance protects you against the financial consequences of chronic illness or disability. Medicare covers no more than 100 days of skilled or rehabilitation care, and Medicaid requires low income to qualify.

Long-term care premiums are not cheap, but the tax code may let you write off some or all of the cost.

How much you deduct depends on your choice of business entity. A full deduction is available in two situations.

If you operate as a C corporation, have the corporation provide the coverage as a tax-free fringe benefit and pay the carrier directly.

If you operate as a sole proprietorship or single-member LLC and your spouse is your only employee, have the business buy a qualified policy covering your spouse-employee, with you covered as the employee’s spouse, and pay the carrier directly. That deduction goes on Schedule C, where it also reduces your self-employment tax.

Otherwise, you face age-based caps. For 2026, they run from $500 at age 40 and below to $6,200 at age 71 and over. Two points worth knowing: the limits apply per insured person (so a married couple both over 70 can count $12,400), and your age is your age at year-end (so if you turn 61 in December, you use the higher $4,960 limit for the whole year).

S corporation owners and partners deduct on Form 7206 subject to those caps, after the entity pays or reimburses the premiums and reports them properly.

Three cautions:

1. Buy a qualified policy.
2. Most hybrid policies (life plus long-term care) produce no deduction unless the issuer separately states a qualified premium.
3. If you have a Health Savings Account (HSA), it can pay these premiums tax-free up to the same caps.

If you want to discuss business deductions for long-term care insurance, please call me on my direct line at 408-778-9651.

• By Leon Clinton
• September 22, 2026

The paid family and medical leave tax credit is now a permanent part of the tax code, and the 2026 rules changed enough that it deserves a fresh look even if you considered it before and passed.

Here is what the credit does: If you have a written leave policy in place, you earn a credit ranging from 12.5 percent to 25 percent of qualifying leave pay, depending on how much of normal wages your policy replaces. A policy paying 100 percent of normal wages earns the full 25 percent.

Three changes matter most for 2026.

First, a new premium method lets you compute the credit on insurance premiums rather than leave wages—which means you can earn a credit in a year when no employee takes a single day of leave.

Second, if you operate in a state with a paid leave mandate, state-required and state-paid leave now counts toward whether your policy provides enough leave. That change alone can move you from ineligible to eligible. You still compute the credit only on the leave pay you fund yourself.

Third (and this may be the most important point for you), whether your own leave earns a credit depends entirely on your entity structure. The credit requires FUTA wages. If you operate as an S corporation or a C corporation and draw a W-2 salary, your own leave can generate a credit, provided your prior-year compensation was $96,000 or less. If you operate as a proprietorship or partnership, it cannot—no amount of planning changes that.

One caution: Document your own leave exactly as you would an employee’s, with dates, the leave purpose, payroll records, and a policy in place before the leave begins.

If you want to discuss the family and medical leave credit, please call me directly at 408-778-9651.

• By Leon Clinton
• September 18, 2026

If you operate your business as a proprietorship, a partnership, or an S corporation, tax code Section 199A can give you a deduction of up to 20 percent of your qualified business income. And here’s the good news: the deduction is now permanent, and beginning in 2026, the rules are friendlier than before.

For 2026, if your taxable income is $403,500 or less (married, filing jointly) or $201,750 or less (single or head of household), you qualify for the deduction regardless of your type of business.

Above those thresholds, the tax code splits businesses into two camps: in-favor businesses, which can still qualify, and out-of-favor “specified service trades or businesses” (SSTBs), such as consulting, which lose the deduction entirely once taxable income exceeds $553,500 (married) or $276,750 (single). There is one bright spot: the phase-in range between those numbers is now 50 percent wider, so a partial deduction survives at higher incomes than before.

If your business mixes in-favor and out-of-favor activities, two de minimis rules can rescue you:

1. If out-of-favor receipts are less than 10 percent of gross receipts (5 percent if receipts exceed $25 million), the entire business is treated as in favor.
2. You can operate two trades or businesses—one in favor, one out of favor—by keeping separate books, separate invoices, and ideally separate employees for each activity.

In short, careful bookkeeping can turn a zero deduction into a substantial one. Also note that the new $400 minimum deduction does not help a pure SSTB above the ceiling, which is one more reason to carve out a genuine in-favor business where possible.

If you want to discuss the Section 199A rules, please call me on my direct line at 408-778-9651.

• By Leon Clinton
• September 15, 2026