Farm Income and Expense - Insurance
Farmers may deduct insurance expenses related to their farming operations as part of their business expenses when filing their tax return. These deductions are reported on Form 4835, which is used to calculate profit or loss from farm rental income and expenses.
Eligible Insurance Expenses
- Insurance premiums for farm property, such as buildings, equipment, and crops.
- Liability insurance covering farm operations.
- Workers’ compensation insurance for farm employees.
- Other insurance directly related to farming activities.
Reporting on Tax Forms
Insurance expenses are included in the total expenses reported on Form 4835, which is attached to Form 1040. This form helps determine the net profit or loss from farming activities. The instructions for Form 4835 provide guidance on what expenses are deductible and how to categorize them.
Important Notes
- Only insurance directly related to the farming business is deductible.
- Personal insurance (e.g., health, life) is not deductible as a farm expense.
- Keep detailed records and receipts for all insurance premiums paid during the tax year.
Source:
Farmer's Tax Guide (Publication 225)
Instructions for Form 1040 (U.S. Individual Income Tax Return)
Instructions for Form 4835 (Farm Rental Income and Expenses)
Disclaimer: Always verify details with the official IRS forms and instructions or consult with a tax professional. OLT (Online Taxes) provides guidance based on retrieved information but does not offer legal or tax advice.