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The recent discussions concerning LTC and LTCI have caused me to do some recalculating regarding our ability to self-fund LTC if the need arises. It seems fairly easy to research costs and use the worse-case scenario. I plugged in $90k/yr here in the Chicago area. And for number of years, I just did trials at a number of lengths of stay.
The item I'm struggling to understand is income taxes.
In our case, funds for self-insuring would come from deferred accounts and therefore would add to our income when withdrawn. That level of withdrawal would surely put us in a higher tax bracket. And, we'd have to gross up the withdrawal amount so the post tax residual would cover the NH bill. To the extent that the LTC expenses are deductible as medical expenses under misc deductions, the tax would be reduced.
I'd appreciate some comments and discussion as to what extent a $90k annual LTC expense level would be deductible. All of it? Half of it? How much more than $90k would need to be withdrawn so that, after taxes, there would be $90k left to cover the bill?
Thanks!
The item I'm struggling to understand is income taxes.
In our case, funds for self-insuring would come from deferred accounts and therefore would add to our income when withdrawn. That level of withdrawal would surely put us in a higher tax bracket. And, we'd have to gross up the withdrawal amount so the post tax residual would cover the NH bill. To the extent that the LTC expenses are deductible as medical expenses under misc deductions, the tax would be reduced.
I'd appreciate some comments and discussion as to what extent a $90k annual LTC expense level would be deductible. All of it? Half of it? How much more than $90k would need to be withdrawn so that, after taxes, there would be $90k left to cover the bill?
Thanks!