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Can I write off General liability insurance?

TL;DR

Yes, general liability insurance is generally deductible as a business expense.

Detailed Answer

General liability insurance premiums are deductible as ordinary and necessary business expenses if they are directly related to your trade or business. This deduction is applicable whether you are a sole proprietor, partnership, or corporation. However, personal liability insurance is not deductible. For example, if you operate a small business and purchase general liability insurance to protect against potential lawsuits, this cost can be deducted. If the insurance also covers personal liabilities, only the portion attributable to business use is deductible.

Where to Put It on the Tax Form

Schedule C (Form 1040), Line 15 for sole proprietors; on the appropriate business expense line for partnerships or corporations.

Real World Example

A freelance graphic designer purchases general liability insurance to cover potential claims related to their work. The annual premium of $500 is deductible as a business expense on their Schedule C.

Audit Risk & Documentation Tips

Maintain documentation such as insurance policy agreements and premium payment receipts. Ensure the insurance is directly related to business activities and not personal coverage to avoid audit issues.

IRS Reference

IRS Publication 535, Business Expenses

Relevant Industries

Small BusinessFreelancersContractorsRetailersService Providers

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Disclaimer: This is for informational purposes only and should not be construed as tax or legal advice. Always consult your tax advisor.

Page created on July 8, 2025

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