Here are seven business insurance items that could be worth a tax deduction. According to the IRS, you can generally deduct premiums for these types of insurance which are related your business:
- Insurance covering losses from fire, storm, theft, accident or similar events.
- Credit insurance that covers losses incurred from bad business debts.
- Group health insurance plans for employees, including long-term care insurance. Note that a partnership which pays accident and health insurance premiums for its partners can generally deduct them as guaranteed payments to partners, and that an S corporation paying accident and health insurance premiums for its more than 2 percent shareholder-employees can generally deduct these costs but must include them as shareholder wages on the W-2, subject to withholding taxes.
- Liability insurance premiums are tax deductible.
- Premiums for malpractice insurance covering personal liability for professional negligence resulting in damage are tax deductible.
- Worker’s compensation insurance set by state law for job-related injury or disease. In a partnership, you may deduct these costs as guaranteed payments to partners. In an S corporation, for shareholder-employees, you can generally deduct these costs but must include them as shareholder wages on the W-2, subject to withholding taxes.
- State unemployment insurance taxes are deductible.
If you haven’t met with an insurance professional to analyze the risks you face, the available insurance coverages and the costs involved, now is always a good time to do so.