Life insurance on yourself is not a deductible business expense.
Why it is not deductible
Premiums on a life insurance policy where you, your family or your business is the beneficiary are not deductible, even when the policy was required to get a business loan. The rule looks at who collects, not at why you bought it. The same answer applies to key person coverage on an employee when the business is the beneficiary.
Log it once, with the line already on it. Type an expense in plain words in ClaryBook and it is filed with a date, vendor, amount and what it was for, so the number your preparer needs for life insurance on yourself is already written down.
Start for freeWhat life insurance on yourself is confused with
- Line 14, employee benefit programs
- Group term life coverage for employees, where the employee's own family is the beneficiary, is a deductible employee benefit on line 14.
- Line 15, insurance
- Line 15 is business insurance other than health; a policy on a life where you or your family collects is not business insurance at all.
Examples people try to deduct here
- A $65 a month term life policy naming your spouse as beneficiary
- A whole life policy building cash value with you as owner and insured
- Key person coverage on your lead technician with the business as beneficiary
- A policy the bank required as collateral for a business loan, with the lender assigned as payee
What does not belong here
- A line 15 business insurance deduction
- The cash value build-up, which is not an expense at all
- Interest on a policy loan, which has its own restrictive rules
The limit that applies
Because the premium is not deducted, the death benefit is generally received tax-free.
What to keep
Keep the policy showing the named beneficiary. If anyone ever questions a premium deduction, the beneficiary designation is the first thing they look at.
Other things that are not deductible
| Expense | Line |
|---|---|
| a business suit | Not deductible |
| a government fine or penalty | Not deductible |
| a parking ticket | Not deductible |
| a personal expense on the business card | Not deductible |
| a spouse's airfare on your business trip | Not deductible |
| a traffic ticket | Not deductible |
| an unpaid invoice | Not deductible |
| commuting mileage | Not deductible |
| country club dues | Not deductible |
| estimated tax payments | Not deductible |
| federal income tax | Not deductible |
| groceries for your home | Not deductible |
Related lookups
Sources
This page explains how Schedule C lines work. It is general information, not tax advice for your situation. If an expense is large or the answer turns on a fact about your business, confirm it with your tax preparer.
Looking for a different expense? The full Schedule C line lookup has every line from 8 to 27 with the expenses that belong on each, and Schedule C expense categories walks the whole form in order.
Log it once, with the line already on it. Type an expense in plain words in ClaryBook and it is filed with a date, vendor, amount and what it was for, so the number your preparer needs for life insurance on yourself is already written down.
Start for free