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Washington State's new income taxes - long term care, capital gains

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  • Washington State's new income taxes - long term care, capital gains

    Apparently Washington State will be adding a long term care tax to payroll taxes, as I understand it 0.58% of your wages uncapped. https://www.psfinc.com/articles/maki...term-care-law/

    There has been some suggestion that it may be beneficial to get your own long term care policy in order to qualify to "opt-out" of the tax, as the premiums can be ~70% refundable. Unfortunately apparently that has to be in place by July of 2020 to qualify for the opt out.

    Any thoughts if that is a good idea?

  • #2
    Is what a good idea...buying long term care insurance or having the state automatically take a tax out? The answer to the first part is it depends. The answer to the second is usually just a plain no.

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    • #3
      Is buying long term care insurance in the first half of your career to avoid a tax like this a good idea? It has the feel in some ways of whole life insurance where you are buying an insurance plan "as an investment", but from the math as long as the annual premium is < 70% of 0.58% of your W2 wages I am not seeing a major down side.

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      • #4
        Originally posted by CFEonline View Post
        Is buying long term care insurance in the first half of your career to avoid a tax like this a good idea? It has the feel in some ways of whole life insurance where you are buying an insurance plan "as an investment", but from the math as long as the annual premium is < 70% of 0.58% of your W2 wages I am not seeing a major down side.
        I guess it depends what kind of policy the state gives you and what kind of policy you could get privately. Or, if Washington is even a place you want to stay long term.

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        • #5
          Originally posted by CordMcNally View Post

          I guess it depends what kind of policy the state gives you and what kind of policy you could get privately. Or, if Washington is even a place you want to stay long term.
          Just as a way to legally minimize taxes

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          • #6
            Don't forget to submit your attestation at the Secure Washington website. I submitted October 2 and we've been notified of approval. These letters will be submitted to our employers to permanently exclude us from this payroll tax.

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            • #7
              Yeppers, this has been an issue for a short while, I believe discussed on another thread. Most irritating, as is typical. Residents of WA who may be impacted need to be aware in order to make informed decisions. Unfortunately, most don’t seem to be. I had a convo with a client there about it and have tried to resurrect it but haven’t been able to find. I believe we were advising to get their own LTDI policy and opt out as they didn’t plan to be there long term, but don’t recall the specific scenario.
              Our passion is protecting clients and others from predatory advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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              • #8
                If you are a WA resident and just leaning about the WA Cares Fund now, you are very late to the game. And likely too late to apply for an exclusion unless you already have your own LTC policy in place. Anyone looking to kill several hours on a Saturday morning should scroll through the now 24 page thread on the topic started on Bogleheads.org in February:

                https://www.bogleheads.org/forum/viewtopic.php?t=340307

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                • #9
                  Just another reason to never consider moving to WA

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                  • #10
                    Originally posted by needlejockey View Post
                    Just another reason to never consider moving to WA
                    Lol. Name the perfect state.

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                    • #11
                      Originally posted by Bmac View Post

                      Lol. Name the perfect state.
                      The Granite State: the Great State of New Hampshire.

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                      • #12
                        Originally posted by Bmac View Post

                        Lol. Name the perfect state.
                        Bamaskazonarkansaforniadonnecticutawaridageogiawai idahowainoisindituckylousiainemaryassachusettichig anesotaissippiissouritananebrevadashirejerseyexico yorksorthcarolinasorthdakotaohioahomaregonennsylis landessesseexasutahmontwestirginiaingtonsinyoming. Clearly.

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                        • #13
                          i think allowing opt outs from taxation should really be explored, however they should be accompanied by iron-clad binding non-reversible agreements never to use the service in question.

                          i think it would generate a ton of clarity around many issues.

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