Long-term Dignity Savings Account Deduction FAQs
This program is designed to allow individual taxpayers to establish and contribute to a long-term dignity savings account to help fund expenses they may incur in the future as a result of being in a long-term care facility. The contributions to the savings account may then be deducted on the Missouri individual income tax return beginning with tax year 2021.
The account may be opened with a financial institution and must be designated, in its entirety, as a long-term dignity savings account. The account should be titled in the name of the owner, along with a designation that it is a long-term dignity savings account.
The account holder may designate himself or herself as the qualified beneficiary or designate a different qualified beneficiary no later than April 15th of the following tax year during which the account was established.
Example: Account established September 2021 beneficiary must be established by April 15, 2022.
The long-term dignity savings account can be established on or after January 1, 2021.
The taxpayer shall file an affidavit with the income tax return to verify the amount of their contributions and provide the form 1099 issued by the financial institution.
The deduction may not exceed the Missouri adjusted gross income and is limited to $4,000 per taxpayer ($8,000, if married filing combined).
Yes, although the account owners must file a married filing combined return.
No, the deduction is only for contributions to the long-term dignity care savings account under 143.1160, RSMo, not expenditures from such an account.
No, the income maintained, accrued, or expended in the long-term dignity savings account is not subject to Missouri state income tax and should be claimed as part of the deduction on the Missouri return.
If any deductible contributions are distributed and not used to pay eligible expenses or were withdrawn in less than a year from the time of the first deposit, the amount of the withdrawal shall be added back to the Missouri adjusted gross income of the account holder in the same tax year the withdrawal was performed. Unqualified withdrawals are also subject to a penalty equal to five or ten percent of the amount of the withdrawal.
If you still have questions, please check out other Individual Income Tax FAQs.