I have to pay $36000 for tail coverage of a malpractice insurance. Will I be able to write it off under employee expenses and does AMT negate most of that. Income of around 275000. Thanks for help.

Zip Code: 90506

If your only income is W-2 income, then unfortunately, the only way to write off this tail insurance premium is as a miscellaneous itemized deduction, which in the aggregate are only deductible to the extent they exceed 2% of your income. So if you have no other miscellaneous itemized deductions to claim, you alreadly can't deduct the first $5500 paid during the year.

To make matters worse, if you're subject to the Alternative Minimum Tax (AMT), then the amount of miscellaneous itemized deductions you can claim is capped.

What this all means is that you might not end up saving much in federal taxes in connection with the $36k tail that you have to pay.

Here are some suggestions to make this insurance deductible. If your only source of income this year is as an indepedent contractor, you could argue that the only place for you to deduct the tail is directly against your independent contractor income on a Schedule C. By doing so, the full amount of your tail is tax deductible.

Another option is to have your current employer pay your tail on your behalf in exchange for a reduced salary. This will also achieve the goal of making your tail insurance premium fully deductible to you.
And for your employer, your total compensation will be the same if they pay you your full salary, or pay you a reduced salary and then make up the difference by paying your tail premium.

Zip Code: 01801