Tax time can spring a bevy of concerns and paperwork for filers trying to break even or achieve a refund. When tracking your fiscal actions and expenses from the prior year, it can be difficult to know what is ultimately redeemable. For some, insurance sometimes qualifies as part of those redeemable expenses. Here are several potential insurance deductions to review when filing your taxes:
Car insurance premiums
“There are situations in regards to your personal insurance when your car is a deductible expense or a portion of it is a deductible expense if you use your vehicle for business,” says local State Farm agent Pam Hansen Alfred.
Depending on how you use your vehicle, your coverage costs are recoverable. According to H&R Block, if your vehicle is driven for work, you can deduct your monthly car insurance premiums. However, you can’t claim both vehicle mileage and car insurance.
Car Insurance Claims
Settlements from automobile accident claims are not eligible for deductions. However, they are also not taxable, so long as the medical expenses associated with the claim were not used as itemized deductions the prior tax year and the payout is not specifically administered for lost wages.
Life Insurance Premiums and Claims
Under some circumstances, life insurance premiums are eligible as tax deductions. “There are situations where premiums paid on life insurance could be tax deductible when there is a charitable organization involved. If the charitable organization is the owner and beneficiary of a life insurance policy and you gift them the annual premium for the policy, then it is often a tax deduction,” says Alfred.
Life Insurance claims are another story. The IRS does not include life insurance payouts as gross income, making payouts untaxable. Since life insurance payouts are not taxable, the premiums paid on them are not eligible for deductions.
Homeowners insurance and home-based businesses
For most individuals, homeowners insurance, which covers items within the home like appliances, furniture, keepsakes, electronics, lawn and garden items and more, is only considered tax deductible when paid on rental properties.
Small business owners, on the other hand, have an opportunity to use their homeowner’s insurance under the home office deduction. Alfred elaborates, “When you have a home office that is used to conduct business out of or used for administrative responsibilities connected to your business, your insurance may be tax deductible.”
Home-based business owners can pool insurance along with other expenses such as utilities, repairs and maintenance, mortgage interest, real estate taxes and more to facilitate this deduction.
To confirm what insurance-related deductions you may qualify for, contact a licensed tax preparation service. For further assistance on your insurance needs, reach out to Pam Hansen Alfred and her team at (406) 453-6010, stop by their offices at 2817 10th Ave. So., or visit www.pamhansenalfred.com.
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2817 10th Ave S
Great Falls, MT
406-453-6010
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