NASE Blogs

Workers’ Compensation

Dec 02, 2009

Q: I’m a sole proprietor and install carpet in office buildings. There’s a new company I want to contract with, but they require that I have workers’ compensation insurance. If I get the insurance, can I deduct the cost on my business tax return?

A:Yes, you can deduct the cost of the premiums you pay for workers’ compensation insurance.

Because the insurance is required for you to establish or continue a working relationship, the cost is considered an ordinary and
necessary business expense for you. When you file Schedule C, Profit or Loss from Business, you will report the expense on line 15.

The cost of workers’ compensation insurance that’s required by state law is also usually deductible. And even if your state has optional workers’ compensation insurance requirements, the premiums are generally deductible.