Business Insurance (Other Than Health)

Hillary rents her apartment from a landlord but hosts the second bedroom in her home on Airbnb (25% of home related to rental activities), which is occupied by guests nearly every day. Hillary carries a renters insurance policy that specifically covers her Airbnb activities. Her policy is $1,200 and runs from March 1, 2017 through February 28, 2018. Hillary could deduct a total of $300 ($1,200 x 25%) on line 9 of her Schedule E, $250 in 2017 ($300/12 x 10 months) and $50 ($300/12 x 2 months) in 2018.

Jess is a sole-practitioner psychiatrist who started her business in January of this year. Since this is her first year in business, her malpractice premiums are $12,000. When Jess prepares her taxes next April she will be able to deduct the full $12,000 of insurance premiums on line 15 of her Schedule C.

Tring is a web developer who is entering his second year of business and ready to hire his first employee. To be competitive, he wants to provide life insurance as an employee benefit. As long as Tring does not stand to benefit from the policy, he would generally be able to deduct the premiums he pays for his new employee on line 14 of his Schedule C.

Joe recently began operating a food truck, serving sloppy joes to customers who line up around the block to try his secret recipe. In January 2017, Joe prepaid $12,000 for two years of general liability insurance to limit his liability in the event a customer falls ill from his food, slips on ice while waiting to order or suffers burns from his piping hot food, amongst other things. When Joe prepares his 2017 tax return, he can deduct $6,000 on line 15 of his Schedule C for his 2017 coverage. In April, 2019 when he prepares his 2018 return he can deduct $6,000 for his 2018 coverage.