You have probably landed on our site because you want to learn more about tax deductible life insurance premiums.

Affordable Life USA helps many small business owners secure great rates on life insurance.

One of the most frequent question many business owners often ask, is life insurance a tax deduction my company can claim as a business expense on my taxes?

Great question!

Most business owners realize that most of the expenses you pay to operate your business are tax-deductible.

We will now take a closer look at tax deductible life insurance for business owners and for the company’s employees.

Dig right into our helpful reference guide on the tax implications of life insurance for business.

Are Life Insurance Premiums Tax Deductible?

Life insurance is a commitment that many self employed people make to provide benefits for employees of their company.

Most employee benefits like 401(k) plans are tax deductible, and you might assume that life insurance policies are as well.

Unfortunately, it’s not always that easy to understand!

There are many things to take into considerations to determine if life insurance is tax deductible.

We always advise you to consult with an accountant for more detailed tax questions and advice.

However, here is a brief summary about the tax implications of life insurance in different scenarios.

is life insurance a business deduction for Business Owners?

The premiums you pay for life insurance policies intended to provide for your family in the event of your death are not tax-deductible, even if you pay the premiums from your business checking account.

However, if you have a life insurance policy for protecting your business assets, life insurance premiums are tax deductible.

So, premiums are deductible as a business expense only when the insured is an employee of the company, and the company is not the beneficiary of the policy.

Therefore, you should be able to deduct life insurance premiums on Schedule C of your 1040.

Is life insurance tax deductible for C Corporation?

For life insurance that is owned by a C corp, it is classified as a non-deductible expense according to Internal Revenue Code 264.

So, life insurance that is owned by the shareholder and is paid for by the C-corp is considered a taxable fringe benefit, either as wages or dividends.

Are life insurance premiums tax deductible for llc’s?

Although the Internal Revenue Service does permit LLCs to deduct most types of insurance premiums as a business expenses, unfortunately life insurance premiums are not eligible.

But, if you are the owner of an LLC and are paying life insurance premiums for employees, these premiums may be deductible.

Keep in mind that this does not hold true if the business owner or LLC will benefit from the coverage.

Are S Corporations eligible for deductible life insurance?

Life insurance premiums are only deductible if the S corporation is offering life insurance as an employee benefit.

The employee will not be taxed on these premiums, because the premiums will be excluded from the wages section on the employee’s W-2.

However, in order for the premiums to be excluded from wages, the S corporation must also provide group life insurance rather than insurance to just a few key executives.

If the policy favors key people, the premiums must be listed as wages.

If an S corporation provides more than $50,000 worth of coverage to a single employee, the company must report amounts paid over $50,000 as wages on the worker’s W-2 form.

The premiums are not deductible when the S corporation is a beneficiary of the policy.

This includes company owned life insurance policies taken out for the benefit of workers.

Is Life Insurance Deductible for premiums paid on Employees?

Is life insurance premiums tax deductible when you purchase life insurance policies for your employees?

Examples of such policies for employees include both buy-sell life insurance and key person life insurance.

Can you write off these life insurance premiums?

Yes, you can usually take a life insurance deduction for the premiums you pay on employees as business expense.

So, the premiums that are paid on the lives of your employees are considered a tax deductible life insurance expense should be claimed as a general business expense.

Is life insurance deductible on Schedule c when I do my taxes?

In order to claim a life insurance deduction, make sure that is also listed on your Schedule C.

Though you can usually deduct the cost of premiums you pay for employee life insurance, you cannot deduct these premiums if you (the business owner) benefit from the policy.

So, if you are the beneficiary of a policy owned by the employee, the premiums you pay are not deductible as a business expense.

Is Life Insurance Deductible for premiums paid on Group Life?

Employers who provide group term life insurance to workers may deduct life insurance premiums paid for coverage if the small business is not the beneficiary. The portion of premium which is a tax deductible expense with group term life insurance premiums is limited to the cost for $50,000 of coverage. So, small companies may take a tax deduction for those premiums, but not for any money paid to provide coverage in excess of a $50,000 death benefit.