Is Life Insurance Tax Deductible for Your Business?

No, life insurance is generally not tax deductible as a business expense. The IRS considers this a personal expense, even if it has some connection to your work activities. However, there may be limited exceptions in specific circumstances.

Key Rules for Deducting Life Insurance

Personal life insurance premiums are not deductible as a business expense. However, if you have key person insurance for an employee, there may be different rules.

Requirements to Claim This Deduction

• Personal life insurance: NOT deductible
• Key person insurance: different rules apply

How to Document Life Insurance for Tax Purposes

Proper documentation is critical for any business deduction. For life insurance, you should:

• Keep all receipts and invoices showing the amount paid
• Record the date of the expense and the business purpose
• If mixed-use, maintain a log showing business vs. personal usage
• Store records for at least 3 years (7 years for major purchases)

Source: IRC § 264. This information is for educational purposes only. Consult a qualified tax professional for advice specific to your situation.