Medical Tail Insurance / Malpractice Insurance

[mortalcoyl]

My spouse moved from one practice to another this year. To leave one practice, we had to pay, out of pocket, a sizable premium for tail insurance. I'm having a hard time figuring out how to account for this expense. He is not self employed and wasn't a partner or owner at either practice; however, this was a large, cash expense that we incurred.  I'd love help understanding where to enter this expense.

[Vanessa A]

If he was an employee, then this is not a deductible expense. 

[mortalcoyl]

So, just to be clear: an employee pays out of pocket to be covered for malpractice and it is no way deductible? How is that justified when a business would be able to deduct it as an expense against income? I'm not challenging whether it's fair; I just want to understand the rationale.

[Vanessa A]

That is correct.  Employee job related expenses are not tax deductible under current tax law unless you are one of the following:

• Armed Forces reservist, 
• a qualifed performing artist, 
• a fee-basis state or local government official, 
• or an individual with a disability claiming impairment-related work expenses

This changed in 2017 with the new tax laws that went into affect back then.  Prior to that, employee job related expenses were deductible as an itemized expense for the amount that was more than 2% of your AGI and then only if you itemized.