Are Life Insurance Premiums Deductible As A Business Expense?

| February 20, 2019

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It is a common misconception that running a business entitles owners to deductible life insurance premiums. But that’s not always true. Unlike the strict rules for individuals, it’s true that businesses have a bit more leniency with tax-deductible life insurance premiums. But only in very specific cases are they deductible as a business expense. In all other cases, deducting those premiums can lead to costly consequences. When can businesses deduct life insurance premiums as a business expense? Businesses must meet a very specific set of qualifications for these premiums to be a deductible business expense. And even those rules have their own caveats. These are the criteria that businesses must meet: They must be classified as either an S Corporation or an LLC. The insureds must be employees or corporate officers under a group policy. The company CANNOT be named as the beneficiary on the group life insurance policy. Only the first $50,000 of premiums paid are deductible. Anything after that is no longer deductible.

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