Gene E. Utterback, EA wrote:

- quote -

WRT the OP's situation (pre-existing medical expenses,
spouse with indeterminate ability to perform services), I
agree he should consult a local tax pro.

I disagree that a sole proprietor whose only employee is a
spouse needs to go through AgriPlan/BizPlan to set up the
105 plan. (If they would rather pay someone else than have
the hassle, sure, but it can be a DIY job.) The plan itself
is a 2-liner - "Effective <date> , <Company> will reimburse
the medical expenses, including insurance premiums, of any
employee, to a maximum of <optional amount> ."

Phoebe

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- quote -

One thing you could do is incorporate your business. As a
C-Corp, you can deduct medical reimbursements in full
against corporate income. It will cost you some
administartive expenses, but you will at least get a dollar
for dollar tax deduction for the medical expenses.

Bruce Raskin, CPA
Small Business and Individual Tax and Accounting Services

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"ge" <e_c_l_e_s[at]a-znet.com> wrote:

- quote -

It may be too late for this to work for you, but you won't
know until you talk with a local tax pro who understands the
concept.

I would suggest you research IRC Section 105 & 106. These
sections allow an employer to offer full health and medical
insurance as well as full coverage or reimbursement of all
out of pocket expenses for all employees. If you can
qualify your wife as an employee part of her compensation
package can be for this coverage. This way, you can convert
all of your insurance premiums as well as all of your out of
pocket expenses to legitimate business deductions - BUT it
MUST be done correctly and there is little chance that you
will be able to do this without professional help.

In addition to a local tax pro, you will need to work with
TASC, the current owners of AgriPlan/BizPlan. They have the
model already set up to make this work.

Good luck,
Gene E. Utterback, EA

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ge <eccles[at]a-znet.com> wrote:

- quote -

Speak with an insurance agent, to see if you can buy an
insurance policy to cover your company for disability of
owners or officers/directors.

If you pay your medical premiums out of your business
profits, those medical premiums might be deductible on page
1 of form 1040, where they will reduce income tax but will
not reduce self employment tax.

If your wife works for your company as its only employee,
the company can pay for a family or 2-person medical policy
for her which also covers you as her spouse, and cost of
that policy could be used as a schedule C expense to reduce
both income and SE tax.

__
Art Kamlet ArtKamlet [at] AOL.com Columbus OH K2PZH

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- quote -

The only was a self employee person could do this is to buy
an insurance corporate shell.

--
Frederick E. Jorden http://Tax-Accounting-Payroll.com
7825 Midlothian Tpk - 207 Richmond, VA 23235-5247
EMAIL knowtax[at]bigfoot.com
(804) 320-6210 FAX (804) 320-6211

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I am self-employed (sole proprietorship), with no other
employees. My wife has been hospitalized quite a bit the
last few years, and, due to restrictions on our health
insurance, we have rather high out-of-pocket medical
expenses. More or less, our deductions cancel our AGI.

But, we still owe the full FICA. My question is whether I
can do anything to convert our medical expenses into
business expenses. Speciically, I was wondering whether I
could set up some sort of 'self-insurance' program.

It seems unlikely, but I thought I should ask.

TIA,
George

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