Can I Write-Off a Business Insurance Expense on My Tax Return?

Written by on 3/14/2017 1:30 PM in , . It has 0 Comments.

 Taxes and Business Insurance NH

There are many business expenses that New Hampshire businesses may write-off on their taxes. Often, business insurance premiums are included among tax-deductible expenses. As with many tax questions, though, the answer to whether a business can write off its business insurance premiums is a little more complicated than a simple “yes.” Here’s a more detailed look at business insurance premiums and taxes.

Can Business Owners in New Hampshire Write Off Business Insurance on Their Taxes?

Business Insurance Premiums Are Generally Deductible

According to the IRS’ website, business owners can generally “deduct the ordinary and necessary cost of insurance as a business expense,” as long as the insurance is for “trade, business, or profession.” In other words, business insurance premiums can normally be written off as long as the premiums are related to a business.

Can I Write-Off My Homeowners Premium if I Work from My Home?

Premiums for personal insurance policies typically can’t be deducted as a business expense, since they aren’t necessary or related to the business. The IRS notes one significant scenario where a personal policy’s premiums might qualify for a deduction, though.

Owners of home-based businesses in New Hampshire might be able to deduct a portion of the expenses related to owning their homes. The potentially qualifying expenses that the IRS lists include mortgage interest, depreciation, utilities, repairs -- and (homeowners) insurance. If a portion of a house is used exclusively for business purposes and the entire house is insured with a homeowner's policy, some of the policy’s premiums likely can be written off. A percentage of the premiums that’s equal to the percent of the home which is used for business can usually be deducted -- this is often considered the percentage that’s used for the business.

Most New Hampshire Businesses Can Deduct Many Insurance Policies’ Premiums

Commercial insurance policies’ premiums can often be written off, as they provide protection for a business and the premiums are paid for by the business. In most cases, commercial policies don’t provide personal protection or coverages, so their entire premiums are deductible.

Common types of commercial insurance that businesses can typically deduct include the following:

More specialized coverages, such as liquor liability insurance (for a business), employment practices liability insurance, and contractors and builders risk insurance, also usually qualify as write-offs.

Businesses May Not Be Able to Deduct All Insurance Premiums

In addition to any insurance coverage that provides an individual with personal protection, there are a few other insurance premiums that businesses usually can’t deduct. Deposits into a self-insured reserve, premiums for some disability insurance policies, certain life insurance policies and premiums paid to obtain loans may not qualify as write-offs according to the IRS.  If there is ever any doubt, consult with an accountant.

Basic Tax Season Prep Tips for Businesses

Filing taxes is another task on an already long list of requirements for a business owners.  Here are some great resources to turn to for general business tax information:

  • For information regarding your specific type of business, check out the IRS website as it can provide information for varies types of business entities such as self-employed, independent contractors, businesses with employees, etc.

This material is for informational purposes only. All statements herein are subject to the provision, exclusions, and conditions of the applicable policy, state and federal laws, including laws of the IRS.  For an actual description of all coverages, terms, conditions and tax law, please refer to the applicable insurance policy, check with the an accountant/IRS and/or your insurance professional. 

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