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disability benefit fund. Deduct these payments as taxes. Self-employment tax. You can deduct part of your self-employment tax as a business ex- pense in figuring your adjusted gross income. This deduction only affects your income tax. It does not affect your net earnings from self-em- ployment or your self-employment tax. To deduct the tax, enter on Schedule 1 (Form 1040), line 27, the amount shown on the Deduction for one-half of self-employment tax line of Schedule SE (Form 1040). For more information on self-employment tax, see Pub. 334. Additional Medicare Tax. You may be re- quired to pay Additional Medicare Tax on self-employment income. See Form 8959 and the Instructions for Form 8959 for more informa- tion on the Additional Medicare Tax. Other Taxes The following are other taxes you can deduct if you incur them in the ordinary course of your trade or business. Excise taxes. Generally, you can deduct as a business expense all excise taxes that are ordi- nary and necessary expenses of carrying on your trade or business. However, see Fuel taxes, later. For more information on excise taxes, see Pub. 510. Franchise taxes. You can deduct corporate franchise taxes as a business expense. Fuel taxes. Generally, taxes on gasoline, die- sel fuel, and other motor fuels that you use in your business are included as part of the cost of the fuel. Do not deduct these taxes as a sepa- rate item. You may be entitled to a credit or refund for federal excise tax you paid on fuels used for certain purposes. For more information, see Pub. 510. Occupational taxes. You can deduct as a business expense an occupational tax charged at a flat rate by a locality for the privilege of working or conducting a business in the locality. Personal property tax. You can deduct any tax imposed by a state or local government on personal property used in your trade or busi- ness. Sales tax. Any sales tax you pay on a service for your business, or on the purchase or use of property in your business is treated as part of the cost of the service or property. If the service or the cost or use of the property is a deductible business expense, you can deduct the tax as part of that service or cost. If the property is merchandise bought for resale, the sales tax is part of the cost of the merchandise. If the prop- erty is depreciable, add the sales tax to the ba- sis for depreciation. For more information on basis, see Pub. 551. Do not deduct state and local sales taxes imposed on the buyer that you must collect and pay over to the state or local government. Also, do not include these taxes in gross receipts or sales. 6. Insurance Reminder Premium tax credit. You may have to use the worksheets in Pub. 974 instead of the work- sheet in this chapter if the insurance plan estab- lished, or considered to be established, under your business was obtained through the Health Insurance Marketplace and you are claiming the premium tax credit. See Pub. 974 for de- tails. Introduction You generally can deduct the ordinary and nec- essary cost of insurance as a business expense if it is for your trade, business, or profession. However, you may have to capitalize certain in- surance costs under the uniform capitalization rules. For more information, see Capitalized Premiums, later. Topics This chapter discusses: • Deductible premiums • Nondeductible premiums • Capitalized premiums • When to deduct premiums Useful Items You may want to see: Publication 15-B Employer's Tax Guide to Fringe Benefits 525 Taxable and Nontaxable Income 538 Accounting Periods and Methods 547 Casualties, Disasters, and Thefts Form (and Instructions) 1040 U.S. Individual Income Tax Return 1040-NR U.S. Nonresident Alien Income Tax Return Schedule A (Form 1040) Itemized Deductions Schedule C (Form 1040) Profit or Loss From Business Schedule C-EZ (Form 1040) Net Profit From Business CAUTION ! 15-B 525 538 547 1040 1040-NR Schedule A (Form 1040) Schedule C (Form 1040) Schedule C-EZ (Form 1040) Schedule F (Form 1040) Profit or Loss From Farming Schedule SE (Form 1040) Self-Employment Tax Schedule K-1 (Form 1065) Partner's Share of Income, Deductions, Credits, etc. 1099-H Health Coverage Tax Credit (HCTC) Advance Payments 2555 Foreign Earned Income 2555-EZ Foreign Earned Income Exclusion 8885 Health Coverage Tax Credit W-2 Wage and Tax Statement See chapter 13 for information about getting publications and forms. Deductible Premiums You generally can deduct premiums you pay for the following kinds of insurance related to your trade or business. 1. Insurance that covers fire, storm, theft, ac- cident, or similar losses. 2. Credit insurance that covers losses from business bad debts. 3. Group hospitalization and medical insur- ance for employees, including long-term care insurance. a. If a partnership pays accident and health insurance premiums for its partners, it generally can deduct them as guaranteed payments to partners. b. If an S corporation pays accident and health insurance premiums for its more-than-2% shareholder-employ- ees, it generally can deduct them, but also must include them in the share- holder's wages subject to federal in- come tax withholding. See Pub.15-B. 4. Liability insurance. 5. Malpractice insurance that covers your personal liability for professional negli- gence resulting in injury or damage to pa- tients or clients. 6. Workers' compensation insurance set by state law that covers any claims for bodily injuries or job-related diseases suffered by employees in your business, regardless of fault. a. If a partnership pays workers' com- pensation premiums for its partners, it generally can deduct them as guaran- teed payments to partners. b. If an S corporation pays workers' compensation premiums for its more-than-2% shareholder-employ- ees, it generally can deduct them, but also must include them in the share- holder's wages. 7. Contributions to a state unemployment in- surance fund are deductible as taxes if they are considered taxes under state law. Schedule F (Form 1040) Schedule SE (Form 1040) Schedule K-1 (Form 1065) 1099-H 2555 2555-EZ 8885 W-2 Page 20 Chapter 6 Insurance