Tax Deduction Consulting: Medical Malpractice Insurance Buckhannon WV
Vealey Financial Services
Years of Experience: 43
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Horizon Financial Group
Education: Ohio University, BBA FinanceCollege for Financial Planning's CFP Certification Professional Education Program
Years of Experience: 15
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Tax Deduction Consulting: Medical Malpractice Insurance
Income Tax Deduction for Medical Malpractice Insurance
Medical Malpractice Insurance certainly meets the IRS definition of both necessary and ordinary. Therefore the premiums paid for Medical Malpractice Insurance is a tax deduction.
Deduct Malpractice Insurance
The IRS uses the phrases of ordinary and necessary to define the kinds of expenses that are normally deductible as business expenses against income tax. The high cost of recent settlements in cases involving malpractice has certainly removed any question of Medical Malpractice Insurance being considered lavish or extravagant. Ordinary and necessary refer to things that are common and appropriate to a business or independent contractor.
The premiums paid for Medical Malpractice Insurance are tax deductions that may be added to the total medical expenses. Medical expenses must exceed 7.5% of a taxpayer adjusted gross income before they may be taken as an itemized deduction. This figure assumes that the average person is going to be paying 7.5% of his income on Medical expenses normally. Therefore only the excess represents a legitimate deduction from income.
A large malpractice policy seems to address the sound risk management principles of good financial planning. This would mean that the premiums would be a good addition to other medical expenses to push the total closer to that magic 7.5% cutoff point. This deduction might be overlooked due to the fact that life insurance premiums are not legitimate deductions and certainly not medical expenses. The Insurance premium for health insurance is a medical expense. Deductions for the other forms of insurance, such as property insurance, are deducted elsewhere.
There are a large number of things that can be included as medical expenses that would count toward the deduction starting point. Many of these items would not even occur to a layman, but a doctor should have a good idea of just about anything that could be remotely considered medical. The...