Business taxation can be an enormously complex matter best handled by a Massachusetts tax planning lawyer. One issue that may cause confusion relates to deductible insurance costs. Certain business insurance premiums are deductible, while others are not.
Insurance premiums are a major expense to businesses and can significantly cut into profits. In order for a premium to be tax deductible, it must meet two criteria:
- The insurance must be of benefit to the functioning of the company.
- Insurances that are designated for the employees at large are generally deductible, while those for a very select group or for one individual are not.
A Massachusetts tax planning lawyer will evaluate your business’ insurances and determine which premiums may be deducted. The following is a partial list of allowable insurance:
- Business liability
- Credit insurance
- Malpractice and professional liability
- Workers’ compensation
- Unemployment insurance
- Group medical
- Product liability
- Business vehicle
Group life insurance premiums are also deductible, provided that the business owner is not the beneficiary.
When Deductions Are Not Allowed
Certain deductions are definitely not allowed, while others fall into a somewhat nebulous, gray area. Keep in mind that you cannot rely on an IRS representative to give you accurate information. Their error is your error. When a deduction falls into such a gray area, an audit will almost certainly bring it into question—which is all the more reason to work with a Massachusetts tax planning lawyer.
By law, businesses must possess certain types of insurance, but the premiums can bring down profits. A Massachusetts tax planning lawyer at Ionson Law can help your business determine strategies for maximizing profits through legitimate deductions. Call us today at (781) 674-2562.