Is Business Insurance Tax Deductible?
Make this tax season a little less stressful by learning what you could potentially deduct when it comes to your business insurance.
The IRS generally considers business insurance a cost of doing business, so your policy premiums may be deductible from your taxable income. A tax professional can ensure you fill out the proper paperwork to ensure you are taking advantage of all deductions available to you.
Here are a few worksheets that can help calculate your deductions:
What Could be Tax Deductible?
Below are some common types of commercial insurance that could be tax-deductible on a corporate tax return.
General Liability Insurance - This common business insurance policy covers legal expenses when your business is sued over claims involving bodily injuries on your property, property damage your business causes, and advertising injuries.
Professional Liability Insurance - Also known as errors and omissions (E&O) insurance or malpractice insurance. This policy protects a company against liability incurred as a result of negligence in performing your professional services.
Commercial Property Insurance - This coverage reimburses the business owner for the cost of repairing or replacing damaged or lost property, such as inventory or equipment due to a covered cause of loss such as fire, windstorm, and more.
Business Interruption Insurance - This covers your lost profits, operating expenses, relocation costs, and payroll when your business cannot function normally, or is shut down because of a covered cause of loss.
Cyber Liability Insurance - Third-party cyber liability policies cover lawsuit fees and losses when your business is responsible for someone else’s data breach and resulting losses.
Workers’ Compensation Insurance - In most states, employers are required to carry a certain amount of workers’ comp coverage for their employees. This pays your employees’ medical expenses and lost wages if they’ve been injured on the job.
Commercial Auto Insurance - This policy covers liability and property damages resulting from accidents in business-owned vehicles. Note: You could have to choose between this deduction and mileage deduction.
Unemployment Insurance - You could potentially deduct the amount you contribute to a state fund.
Health Insurance - If your business has employees and you pay a portion of their health insurance premiums, then these amounts could potentially be deducted as an employee benefit program expense.
What Is Usually Not Tax Deductible?
- What you pay into a self-insured reserve.
- Premiums on a disability policy that covers your lost income.
- Premiums for loan protection insurance.
If you have any questions, reach out to Pioneer's Insurance Division for more information.
Pioneer and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.
Insurance products are offered through Pioneer Insurance Agency Inc., a wholly owned subsidiary of Pioneer Bank, National Association.
| Not FDIC Insured. | Not Bank Guaranteed. | Not a Bank Deposit. | Not Insured by any Government Agency. | May Go Down in Value. |
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Disclaimer
The material provided on this website is intended for informational purposes only. Links to other web sites are provided for reference and do not constitute a referral or endorsement by Pioneer or its affiliates. Please note that such material is not updated regularly and that some of the information may not be current. It is recommended that you consult with a financial professional for assistance regarding the information contained herein.