Can I Deduct Business Insurance Premiums From My Taxes?

Can I Deduct Business Insurance Premiums From My Taxes?Can I deduct business insurance premiums from my taxes? The IRS can be a terrifying thought, especially for a new business owner. It can also be extremely overwhelming once you’re caught up in codes, forms and more forms.

But it shouldn’t have to be. In fact, the IRS works in your favor. Did you know that your insurance premiums are tax deductible by default? Let’s go through more information about the IRS and what a business can and can’t list as a tax deductible: The results will surprise you.

IRS Publication 535

Can I deduct business insurance premiums from my taxes? If you have a small or moderate home business, then you should start with IRS Publication 535: Chapter six focuses on insurance, and explains more about what can be listed when it comes to your medical and dental premiums to be deducted from your taxes. That’s not all: Small business owners should also read the Tax Guide for Small Business (that’s IRS Publication 334!) to familiarize themselves with the tax requirements for business owners and their employees.

Read through Publication 15-B, too: This is the Employer’s Tax Guide to Fringe Benefits, and tells you everything you need to know about fringe benefits, your company and the IRS.

Insurance: What Can You Deduct?

Can I deduct business insurance premiums from my taxes? Let’s talk about some of the common types of business insurance premiums you can deduct. Here it goes…

  • Commercial Property Insurance: This covers you against damage (from fire, storm, theft, accidents and more) to your buildings, the content in them and more. There are many types of commercial property insurance that are deductible.
  • Business Interruption Insurance: Pays for lost income if your business is shut down due to a fire or covered cause.
  • Workers Compensation Insurance: This covers you against any form of injuries that are suffered by employees in your business, usually regardless of which party was at fault for the event.
  • Liability Insurance: Virtually every type is deductible.
  • Health Insurance: Medical insurance covers you and your employees.
  • Errors And Omissions Insurance (E&O): Covers your liability for professional negligence (bad advice) resulting in bodily injury or property damage to patients or clients
  • Life Insurance: Business life insurance covering your officers and employees.
  • Auto Insurance: Commercial auto insurance covers any business vehicles.

What Can’t Be Deducted

Of course, we’ve already mentioned that there are acceptable business deductions that are clearly outlined in the IRS publications mentioned above: Read them to be sure. There are still a few things that you can’t deduct. Some of them are…

  • Insurance premiums that are paid as collateral to a loan.
  • Income protection insurance, that pays for lost earnings (income) during a disability.
  • Certain types of life insurance premiums (where you are named beneficiary).

Ethan’s Last Word

This is a general list of some of the deductions and exclusions published by the Internal Revenue Service. These deductions can change yearly and are subject to certain exceptions. The moral of the story is you should familiarize yourself with the tax deductible benefits of business insurance, and confirm with your tax professional when you take the deductions.

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