Liability - General / Professional
Tax Deduction When You Take Out Insurance. Find out how!
Did you know that insurance premiums are tax-deductible? Find out which types of insurance can save you money and how it works.
Save on Your Income Tax with EXS Insurance? Find Out How
The filing period for the 2023 IRS tax return runs from April 1 to June 30, and you’re encouraged to include all expenses that qualify for a tax deduction so that, when all is said and done, you’ll pay as little as possible or even receive a refund.
However, not all insurance expenses that now appear on the portal are tax-deductible. For example, for certain types of insurance, such as life insurance, there are strict rules regarding who can deduct this expense—though this does not mean you cannot still take advantage of any discounts or tax benefits related to your insurance policies.
In total, there are five insurance policies that can provide you with income tax deductions, and all of them, without exception, are part of the EXS portfolio.
What types of insurance are tax-deductible on the IRS return?
According to the IRS Code, and as is the case with other healthcare expenses, 15% of the premiums paid for health insurance can be deducted on your IRS return up to a maximum limit of 1,000 euros. In other words, you cannot deduct more than that, even if you spent more.
In the first few months of the following year, the insurance company will send you a statement listing the expenses incurred; you should then include that amount in Schedule H of your IRS return (or verify that the pre-filled information is correct).
Unlike in the past, it is no longer possible to use life insurance to claim a tax deduction. However, there are three exceptions to this rule:
a) Taxpayers in high-turnover professions: according to the Article 27 of the Personal Income Tax Code, anyone in this situation may be eligible for a full deduction of the premiums paid for life insurance; however, this applies only when the insurance covers solely the risks of disability, death, or retirement due to old age.
In this case, the deduction limit is set at 2,194.05 euros and includes physically demanding occupations such as miners and fishermen.
b) The taxpayer has a disability with a degree of impairment equal to or greater than 60%.
Those who meet this requirement are eligible for a deduction of 25% from premiums for death or disability coverage, according to the Article 87 of the Personal Income Tax Code. However, the deduction may not exceed 15% of the total tax amount;
c) The taxpayer has an insurance policy that contributes to their retirement
In these cases, since retirement savings plans (PPR) are included, you can claim a deduction for insurance premiums paid on your income tax return, which will include 20% of the premiums. The deduction limit varies depending on your age (Article 21 of the Personal Income Tax Code):
- Under 35: 400 euros
- Ages 35 to 50: 350 euros
- Over 50 years old (and not retired): 300 euros
Since the Tax Authority considers Multi-Risk Home Insurance to be optional and only allows mandatory insurance premiums to be deducted from property income for personal income tax purposes, landlords who have this insurance are not entitled to tax benefits.
There is, however, a possibility of claiming tax deductions related to real estate. This is possible if you decide to rent out your property and have fire insurance (which is mandatory), since the receipts for this insurance can be claimed as a deduction on your income tax return (Annex H).
According to the Article 27 of the Personal Income Tax Code, only those in physically demanding occupations may deduct 100% from the premiums paid for personal accident insurance on their income tax return, up to a deductible limit of 2,194.05 euros.
Although auto insurance does not entitle you to any benefits or tax deductions on your IRS return, you can deduct this expense as “General Household Expenses” on E-fatura.
As we mentioned, you will be sent a statement listing the expenses incurred, and you must then include that amount in Schedule H of your IRS return (or verify that the pre-filled information is correct).
