Malpractice insurance and taxes

[ShahMD]

So let's say I start doing some independent contact work full time. As a hypothetical, let's say they pay me 200/hr but then take out 15 dollars per hour for malpractice. Is that something I can tax deduct as an IC or does the group employing me get to do that tax deduction? Is malpractice insurance even tax deductible? Thanks for the help!

[jfoxcpacfp]

ShahMD wrote:

So let’s say I start doing some independent contact work full time. As a hypothetical, let’s say they pay me 200/hr but then take out 15 dollars per hour for malpractice. Is that something I can tax deduct as an IC or does the group employing me get to do that tax deduction? Is malpractice insurance even tax deductible? Thanks for the help!

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Yes, malpractice insurance is tax deductible. Whether you deduct it on your tax return or not depends on how they report their payments to you. Let's say they pay you $200,000 in 2017 and take out $15,000 for malpractice, so you net $185,000.

• If your 1099 shows payments of $185,000, you have by default already deducted the malpractice and there is no additional deduction for you to take.


• If your 1099 shows payments of $200,000, you will report income of $200,000 and a deduction for malpractice insurance of $15,000, netting $185,000, same result.