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Insurance Deductions for Small Business
Posted on 6/9/15 at 10:56 am
Posted on 6/9/15 at 10:56 am
I have a small business and my wife and I are both employees. She currently has insurance from her other job, but she will be quitting this job July 1st.
We are currently doing some insurance shopping for a group policy to purchase through my business. I plan on purchasing the insurance for her, and claiming myself as a dependent. We are also looking at individual plans through BCBS, where I can reimburse her for monthly premiums she pays.
From my understanding, as long as we both have active insurance for 12 months, the insurance premium is tax deductible. My CPA says it doesn’t matter if it’s a group policy or an individual plan. Does that mean that the 12 months begins once our new insurance we purchase through the business is active? Or can we include the cost of insurance through her work for the first half of the year? In other words, can I reimburse her for what she paid at her previous job if she was already an employee with my business?
Any other tidbits about individual vs business health insurances would be appreciated. My wife already has BCBS through her current employment, so we figured we just keep it with them.
TIA
We are currently doing some insurance shopping for a group policy to purchase through my business. I plan on purchasing the insurance for her, and claiming myself as a dependent. We are also looking at individual plans through BCBS, where I can reimburse her for monthly premiums she pays.
From my understanding, as long as we both have active insurance for 12 months, the insurance premium is tax deductible. My CPA says it doesn’t matter if it’s a group policy or an individual plan. Does that mean that the 12 months begins once our new insurance we purchase through the business is active? Or can we include the cost of insurance through her work for the first half of the year? In other words, can I reimburse her for what she paid at her previous job if she was already an employee with my business?
Any other tidbits about individual vs business health insurances would be appreciated. My wife already has BCBS through her current employment, so we figured we just keep it with them.
TIA
2
Posted on 6/9/15 at 12:03 pm to WarmBubble
It's reported on my wife's W-2 and it can be deducted. We have a group plan through the business.
Posted on 6/9/15 at 12:10 pm to WarmBubble
Make your wife an employee. Give her a W-2.
Put the health insurance in her name.
Set up a Section 105 health plan. (Cost around $400/yr). Fund plan.
Wife seeks reimbursement from plan of both medical insurance premiums AND medical expenses.
Plan reimburses her.
Company gets to deduct 100 percent of the health insurance AND medical payments on Schedule C, saving both income and S/E tax.
Now, if you do this, you have to do it for each employee. So, if you have employees other than your wife, this might not be as attractive to you.
Self-employed health insurance deduction doesn't work if your wife had access to insurance at work AND could cover both of you.
EDIT: To clarify, if you have employees, you could still do this plan and get the deduction, however, you might not want to offer payment for medical expenses, you might want to limit it only to medical insurance (if you want to cover the other employees insurance)
Put the health insurance in her name.
Set up a Section 105 health plan. (Cost around $400/yr). Fund plan.
Wife seeks reimbursement from plan of both medical insurance premiums AND medical expenses.
Plan reimburses her.
Company gets to deduct 100 percent of the health insurance AND medical payments on Schedule C, saving both income and S/E tax.
Now, if you do this, you have to do it for each employee. So, if you have employees other than your wife, this might not be as attractive to you.
Self-employed health insurance deduction doesn't work if your wife had access to insurance at work AND could cover both of you.
EDIT: To clarify, if you have employees, you could still do this plan and get the deduction, however, you might not want to offer payment for medical expenses, you might want to limit it only to medical insurance (if you want to cover the other employees insurance)
This post was edited on 6/9/15 at 12:11 pm
Posted on 6/9/15 at 1:36 pm to LSUFanHouston
LSUFanHouston.... 
Will run this by my CPA. I appreicate your response!
Will run this by my CPA. I appreicate your response!
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