Co-Founder, Coastal Financial Partners Group, California
No, a personal income tax deduction is not allowed where the taxpayer is the policy owner or beneficiary. A business cannot do so either where the business is owner and beneficiary.
Business owners who wish to obtain a deduction for their business while obtaining life insurance often do so indirectly through other arrangements that use life insurance such as bonus plans, pension plans or group term life plans.
In limited circumstances, one may be able to take a charitable deduction for premium paid on a life policy where the charity is the owner and beneficiary. This is for general planning information only - consult with a tax adviser for tax advice for your situation.
Yes. Certain qualified plans, with their inherent deductability can use whole life insurance and universal life insurance. Doing so will subject the participant to the economic benefit tax, but it may be financially viable. There are specific plans such as 412i and 419af6 death benefit only plans that have tax deductability and can include life insurance.
Yes, in addition, certain charitable giving situations allow for a tax deduction of the premium paid on the policy as a charitable deduction.
For example, you may wish to endow your church for $50,000 upon your death. You would make the Church's 501(c)3 Charity, the Irrevocable Beneficiary and Owner of your policy and you would be the insured and Payor of the plan. Since you have no interest in the cash value or benefit your premium payments would be considered deductible under the Charitable Giving Deduction on your returns.
As always, Insurance agents do not give tax or legal advice, always verify suggestions or comments with your Tax Adviser, CPA or Attorney.
.JPG){kind=avatar}
Business owners who wish to obtain a deduction for their business while obtaining life insurance often do so indirectly through other arrangements that use life insurance such as bonus plans, pension plans or group term life plans.
In limited circumstances, one may be able to take a charitable deduction for premium paid on a life policy where the charity is the owner and beneficiary. This is for general planning information only - consult with a tax adviser for tax advice for your situation.
For example, you may wish to endow your church for $50,000 upon your death. You would make the Church's 501(c)3 Charity, the Irrevocable Beneficiary and Owner of your policy and you would be the insured and Payor of the plan. Since you have no interest in the cash value or benefit your premium payments would be considered deductible under the Charitable Giving Deduction on your returns.
As always, Insurance agents do not give tax or legal advice, always verify suggestions or comments with your Tax Adviser, CPA or Attorney.