Is Professional Liability Insurance Tax Deductible? Yes — Here's How to Claim It
100%
Deductible
Line 15
Schedule C
Insurance (not health)
Category
$500–$2,500/yr
Typical cost
Professional liability insurance and errors & omissions (E&O) coverage protect your business from costly lawsuits—and the premiums are fully deductible. Whether you're a freelancer, consultant, or single-member LLC, these insurance costs reduce your taxable business income dollar-for-dollar. This guide shows you exactly how to claim this deduction on your tax return.
Who qualifies?
Self-employed individuals, sole proprietors, freelancers, and single-member LLCs filing Schedule C can deduct professional liability and E&O insurance premiums. The policy must cover your business activities; personal or health insurance does not qualify.
How to claim it
- 1 Gather your annual professional liability and E&O insurance premium statements and receipts.
- 2 Report the total annual premium amount on Schedule C, Line 15 (Insurance—not health).
- 3 Attach documentation to your tax return if filing electronically, or keep receipts on file if filing by mail.
Pro tip
Track your insurance renewal dates and costs in a dedicated spreadsheet throughout the year. If you pay quarterly or monthly, total all payments to ensure you claim the full annual deductible amount—don't miss partial-year premiums or mid-year policy changes.
Source: IRS Publication 535: Business Expenses
Judy automatically tracks Professional Liability / E&O Insurance
Connect your business bank account and Judy categorizes Professional Liability / E&O Insurance charges to Insurance (not health) (Line 15) — no spreadsheets, no manual entry. Get a free 30-day audit first, then subscribe.
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