Does insurance count as an expense?

Car insurance is tax-deductible as part of a list of expenses for certain people. Usually, people who are self-employed can deduct car insurance, but there are some other specific people for whom car insurance is tax-deductible, such as armed forces reservists or qualified performing artists. The good news is that you don't have to itemize your car insurance premiums or mileage as business expenses. Premiums for insurance purchased through COBRA are deductible, as are Medicare premiums for Parts B and D.

If you use a car for work-related purposes (except as an employee), many expenses related to that vehicle may be tax-deductible as business expenses, including the car insurance premium. All of the health insurance premiums you pay out of pocket for policies that cover health care are tax-deductible. You must reduce your total deductible medical expenses for the year by any amount offset by insurance or any other reimbursement of deductible medical expenses, as well as by the expenses used to calculate other credits or deductions. If you are self-employed, you can directly deduct from your income the amount you paid for health insurance and any qualifying long-term care insurance premiums.

If you buy health insurance through the federal insurance market or the state market, any premium you pay out of pocket is tax-deductible. Coverages and other features vary between insurers, vary by state, and are not available in all states. If you are self-employed and have a net profit during the year, you may be eligible for the health insurance deduction for self-employed workers. Generally, you must use your vehicle for business reasons (other than as an employee) to deduct part of your car insurance premium as a business expense.

While you can deduct the cost of your car insurance premiums, these are just one of the many items you can include as part of using the “real car expenses” method. If you pay any health insurance premiums out of pocket, be aware that a late or missed payment can negatively affect your credit score. If you qualify, you can (deduct) all expenses related to your commercial vehicle, including the car insurance premium, or (deduct) an amount based on the actual miles you traveled for your business, using a cents per mile rate.

Jenny Kizzia
Jenny Kizzia

Professional food ninja. Proud coffee expert. Friendly pop culture guru. Certified beer buff. Beer scholar.