Can my company deduct my personal disability-insurance premiums?

Review the policy, premium treatment and taxation of potential benefits together. Paying through the company does not automatically improve the overall result, especially for an owner subject to special fringe-benefit rules.

A business-owner scenario

A founder wants the business to take over a personally owned disability policy. The immediate premium deduction is only part of the decision; the insured also needs to understand how the chosen arrangement can affect future benefit taxation.

Illustrative scenario, not a client result.

Work through the transaction

1. Identify the policyholder, insured and beneficiary.
2. Review owner status and payroll treatment.
3. Compare premium and benefit tax consequences with the insurance advisor.

The mistake that changes the result

Choosing solely from this year's premium cost can ignore the tax treatment of much larger future benefits.

Records that resolve the question

• Policy.
• Premium history.
• Ownership percentages.
• Prior wage and deduction treatment.

The decision to document

Request a coordinated explanation from the tax and insurance advisors before changing the payer. Preserve the premium history because future claims may depend on how the coverage was funded and reported over time.

Which fact changes the answer?

An individually owned disability policy and an employer-sponsored arrangement may have different premium and benefit treatment. Identify any change before moving payment to the company. Keep past funding records so future advice can account for the coverage history.

Explore employees and owner benefits advisory · Discuss your situation with AE Tax Advisors

Related owner questions

• My family uses the company car on weekends. How should we report it?
• My spouse can get health insurance at work. Does that affect my S-corp deduction?

Sources and scope

• IRS Publication 15-B: fringe benefits
• IRS Publication 15: employer tax guide

General educational information prepared with AI assistance. No individual professional review is represented. Apply the relevant tax-year rules to the actual records. Editorial policy · AI disclosure.