Page 80 - Small Business Taxes

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2555 2555 Foreign Earned Income 10. Life insurance covering your officers and
employees if you aren’t directly or indi-
6. W-2 W-2 Wage and Tax Statement rectly a beneficiary under the contract.
See chapter 12 for information about getting 11. Business interruption insurance that pays
publications and forms. for lost profits if your business is shut
Insurance down due to a fire or other cause.
Deductible Premiums Self-Employed Health

Reminder You can generally deduct premiums you pay for Insurance Deduction
the following kinds of insurance related to your You may be able to deduct the amount you paid
Premium tax credit. You may have to use the trade or business. for medical and dental insurance and qualified
worksheets in Pub. 974 instead of the work- 1. Insurance that covers fire, storm, theft, ac- long-term care insurance for yourself, your
sheet in this chapter. Use the worksheets in cident, or similar losses. spouse, and your dependents. The health insur-
Pub. 974 if the insurance plan established, or 2. Credit insurance that covers losses from ance can cover your child who was under age
considered to be established, under your busi- business bad debts. 27 at the end of 2022, even if the child wasn’t
ness was obtained through the Health Insur- your dependent. A child includes your son,
ance Marketplace and you are claiming the pre- 3. Group hospitalization and medical insur- daughter, stepchild, adopted child, or foster
mium tax credit. See Pub. 974 for details. ance for employees, including long-term child. A foster child is any child placed with you
care insurance. by an authorized placement agency or by judg-
ment, decree, or other order of any court of
Introduction a. If a partnership pays accident and competent jurisdiction.
health insurance premiums for its
You can generally deduct the ordinary and nec- partners, it can generally deduct them One of the following statements must be
essary cost of insurance as a business expense as guaranteed payments to partners. true.
if it is for your trade, business, or profession. b. If an S corporation pays accident and • You were self-employed and had a net
However, you may have to capitalize certain in- health insurance premiums for its profit for the year reported on Schedule C
surance costs under the uniform capitalization more-than-2% shareholder-employ- (Form 1040) or Schedule F (Form 1040).
rules. For more information, see Capitalized ees, it can generally deduct them, but • You were a partner with net earnings from
Premiums, later. must also include them in the share- self-employment for the year reported on
holder's wages subject to federal in- Schedule K-1 (Form 1065), box 14,
code A.
Topics come tax withholding. See Pub.15-B. • You used one of the optional methods to
This chapter discusses: 4. Liability insurance. figure your net earnings from self-employ-
ment on Schedule SE.
• Deductible premiums 5. Malpractice insurance that covers your • You received wages in 2022 from an S cor-
• Nondeductible premiums personal liability for professional negli- poration in which you were a
• Capitalized premiums gence resulting in injury or damage to pa- more-than-2% shareholder. Health insur-
• When to deduct premiums tients or clients. ance premiums paid or reimbursed by the
6. Workers' compensation insurance set by S corporation are shown as wages on
Useful Items state law that covers any claims for bodily Form W-2.
You may want to see: injuries or job-related diseases suffered by The insurance plan must be established, or
employees in your business, regardless of considered to be established, as discussed in
Publication fault. the following bullets, under your business.
15-B 15-B Employer's Tax Guide to Fringe a. If a partnership pays workers' com- • For self-employed individuals filing a
Benefits pensation premiums for its partners, it Schedule C (Form 1040) or Schedule F
can generally deduct them as guaran-
(Form 1040), a policy can be either in the
525 525 Taxable and Nontaxable Income teed payments to partners. name of the business or in the name of the
individual.
538 538 Accounting Periods and Methods b. If an S corporation pays workers' • For partners, a policy can be either in the
547 547 Casualties, Disasters, and Thefts compensation premiums for its name of the partnership or in the name of
more-than-2% shareholder-employ-
Form (and Instructions) ees, it can generally deduct them, but the partner. You can either pay the premi-
ums yourself or the partnership can pay
must also include them in the share-
1040 1040 U.S. Individual Income Tax Return holder's wages. them and report the premium amounts on
Schedule K-1 (Form 1065) as guaranteed
1040-NR 1040-NR U.S. Nonresident Alien Income 7. Contributions to a state unemployment in- payments to be included in your gross in-
Tax Return surance fund are deductible as taxes if come. However, if the policy is in your
Schedule 1 (Form 1040) Schedule 1 (Form 1040) Additional they are considered taxes under state law. name and you pay the premiums yourself,
Income and Adjustments to Income 8. Overhead insurance that pays for busi- the partnership must reimburse you and
report the premium amounts on Sched-
Schedule A (Form 1040) Schedule A (Form 1040) Itemized ness overhead expenses you have during ule K-1 (Form 1065) as guaranteed pay-
Deductions long periods of disability caused by your ments to be included in your gross income.
injury or sickness.
Schedule C (Form 1040) Schedule C (Form 1040) Profit or Loss Otherwise, the insurance plan won’t be
From Business 9. Car and other vehicle insurance that cov- considered to be established under your
ers vehicles used in your business for lia-
business.
Schedule F (Form 1040) Schedule F (Form 1040) Profit or Loss bility, damages, and other losses. If you • For more-than-2% shareholders, a policy
From Farming operate a vehicle partly for personal use can be either in the name of the S corpora-
Schedule SE (Form 1040) Schedule SE (Form 1040) and partly for business use, deduct only tion or in the name of the shareholder. You
can either pay the premiums yourself or
the part of the insurance premium that ap-
Self-Employment Tax plies to the business use of the vehicle. If the S corporation can pay them and report
Schedule K-1 (Form 1065) Schedule K-1 (Form 1065) Partner's you use the standard mileage rate to fig- the premium amounts on Form W-2 as wa-
Share of Income, Deductions, ure your car expenses, you can’t deduct ges to be included in your gross income.
Credits, etc. any car insurance premiums. However, if the policy is in your name and
Chapter 6 Insurance Page 21