Are you eligible for COVID-19 tax credits for yourself and/or your employees? Have you reimbursed your employees (including your employee-spouse) as stipulated in your health reimbursement arrangements? And if you operate as an S corporation, do you have your health insurance set up correctly for your best tax deduction? In this article, we help with these matters and more.

Rising federal employment taxes, including Social Security and Medicare, are a growing burden for employees, employers, and self-employed individuals. To mitigate these costs, consider operating as an S corporation or utilizing community property state rules for husband-wife businesses. Strategic tax planning can significantly reduce the impact of these increasing taxes.

Individuals and partners who were self-employed during 2021 were entitled to claim refundable tax credits for sick and family leave if they were unable to work for various COVID-19-related reasons, such as suffering from COVID itself, getting vaccinated, being under quarantine, or looking after family members impacted by the virus. Those who failed to claim the credits with their 2021 tax return need to read this article. The credits can be worth up to $32,220.

The Section 105 medical reimbursement plan can be confusing, and you want to get it right. To help, we answer eight common questions in this article, including what documentation to use, where to file for the deduction, how many work hours are needed to justify the reimbursement, who needs to create the plan, whether it will work with an S corporation, and more.

Use these 10 strategies on your Schedule C business to generate tax savings.

Is the husband-and-wife LLC taxed as a partnership a good entity to create tax-deductible Section 105 medical plan reimbursements?

If you encourage your employees to get the COVID-19 vaccination by giving them paid time off through September 30, 2021, you can collect refundable sick and family leave tax credits of up to $17,511 per employee. The credit is also available if an employee takes time off to help family or household members get vaccinated or recover from side effects of the vaccination. Similar credits are available if you are self-employed and have no employees.

The thought of an IRS audit is a worry—no question about it. But it’s worse when the IRS wants a lot of your money. And it’s even worse yet when the IRS wants your money because it interprets the law incorrectly and, at the time you see the IRS adjustment, you have no idea whether the IRS is right or wrong.

Do you own your own business? Do you have close relatives? If you responded yes to both, you have a golden opportunity to slash your business taxes. With the help of family members, you can utilize several tax-saving strategies to reap some nice financial benefits for both you and your relatives.

If you own your own business, hiring your spouse to work as your employee can be a great tax savings strategy. But the tax savings may be a mirage if you don’t pay your spouse the right way. And the arrangement is subject to attack by the IRS. Here are five things to know before you hire your spouse that will maximize your savings and minimize the audit risk.

Are you eligible for COVID-19 tax credits for yourself and/or your employees? Have you reimbursed your employees (including your employee spouse) as stipulated in your health reimbursement arrangements? And if you operate as an S corporation, do you have your health insurance set up correctly for your best tax deduction? In this article, we help with these matters and more.

Following a presidential executive order, the IRS says employers can stop withholding and paying employee Social Security taxes for the rest of 2020. But employers who do so face potential risks. Do employers have to accept the offer?

Thanks to new government guidance, we have clarity on how the self-employed and owner-employees treat their PPP loan forgiveness applications. The new PPP rules explain how you identify qualifying PPP compensation for partnerships, corporations, and the self-employed. The new rules also explain when you can apply for forgiveness. Let’s get started.

When you operate a husband-wife partnership, you likely are paying far more than you need to pay in self-employment taxes. This article gives you three strategies you can use to save some serious money on the payment of self-employment taxes.

When you employ your children to work in your business, make sure that you are ready to answer questions from both the IRS and the Department of Labor. The answer to the question in this article may come as a surprise as to what triggered the problem.

If you and your spouse work together in a business that you do not operate as a corporation, you can run into the partnership rules—and they are not usually friendly to a spouse partnership. In Part 1 of this article, you will see how the partnership rules work. You will also see how spouses can elect joint venture tax return treatment.

As with all financial transactions, divorce comes with tax consequences. And those consequences have changed for tax years 2018 and later thanks to the Tax Cuts and Jobs Act (TCJA). If you are thinking of divorce or are currently in the process, make sure to read this article.

The Tax Cuts and Jobs Act made several beneficial changes that affect partnerships and their partners and LLCs and their members that are treated as partnerships for tax purposes.

Tax reform changed the rules of the game when choosing your best tax structure. A properly structured spousal partnership could now be your best choice, even over the S corporation in some circumstances. But beware, you need to navigate nuances in the law to do this correctly.

If you are married, operate as a sole proprietor or as a single-member LLC taxed on Schedule C of your Form 1040, and have no employees, you absolutely, positively must consider hiring your spouse and creating the 105-HRA medical reimbursement plan. In this situation, the 105-HRA can cut your taxes without you spending one penny.

If you operate your business as a sole proprietorship, the government takes a big chunk of your profits in the form of self-employment taxes. But there’s good news. With the help of your spouse, you can reduce your self-employment tax bill by using a simple rental strategy.

If you or you and your spouse own your business and you have children, you need to consider the financial benefits of hiring those children to work in your business. Some businesses benefit more than others, but almost all businesses likely come out ahead with this strategy. And every business needs to thank tax reform for the new increased standard deduction that a business owner’s child can use to pay zero in taxes.

Traditional business entertainment such as business meals and ballgames with clients and prospects died with tax reform. That’s a sad deal, really. On the good news front, your parties with employees remain deductible, as do your employee entertainment facilities and selected other types of entertainment.

Having a business or activity operated as a partnership means extra tax return filings and compliance headaches. But you might qualify to elect out of partnership treatment. Here, we discuss the two elections available, when you qualify or not, and the impact of making an escape election.

The 105-HRA is the medical reimbursement plan you likely want to use if (a) you report your business income and expenses on Schedule C of your Form 1040 and (b) you can make your spouse your one and only eligible employee. Also, if you are single and operate your business as a C corporation, and if you are the one and only eligible employee of your C corporation, the 105-HRA is the medical reimbursement plan for you.

Health insurance premiums are rising at an astronomic rate. This is one of the biggest monthly expenses for many families. That’s where, because you are in business, a properly planned and executed Section 105 plan can work for you. This plan works like magic—it turns your medical expenses into tax-favored business expenses.

Schedule C business owners and their spouses must obtain health insurance coverage for themselves (and any other dependents) or risk a penalty under health care reform. While there are many ways to get that coverage, one way—a properly established proprietorship reimbursement arrangement—can lead to three and possibly four significant tax advantages for the business owner and spouse.

If you want to rent one, two, or twenty bedrooms in your home, you need to avoid one big trap and navigate two sets of rules to obtain the tax benefits you likely were hoping for when you thought of this rental activity. This is an area where tax knowledge is power. Without the knowledge, you could create a very unsatisfactory tax result.

Do you have a solo 401(k) plan with more than $250,000 in it? Did you, your tax preparer, or the plan administrator file your 5500-EZ? Are you sure? The penalty for not filing the required 5500-EZ for a plan year is $25 a day, capped at $15,000. That’s for one plan year. If you failed for 10 years, that’s $150,000.

If you are selling your business, you likely want minimum taxes and no exposure to business-related liabilities once the sale is completed. That’s what this article is about. In an asset sale, you see types of taxes and opportunities that make the asset sale work to your advantage. In a stock sale, you likely get tax-favored capital gains, but you may have to give up something to the buyer.

Have you ever faced this “problem”? A sudden boom in business requires you and your employees to work late in order to get everything finished. When this happens, how can you thank your employees for their overtime with a tax-free benefit that’s fully deductible to your business? You can provide a supper money fringe benefit if you follow four rules.

Where can you hold your tax-deductible board meetings if you operate your business as a corporation? Could you go to a nice resort? What if you and your spouse are the only board members? This article answers these common questions. It’s sure to make you smile.

There are special rules that you need to know regarding the deduction of your net losses if you co-own or co-manage a business or investment with your spouse. Tax law gives you some nice advantages, but they’re not what we would call logical. If you don’t know how the rules work, you might be missing out on money-saving benefits.

Would you like to deduct business meals with your spouse? What would the IRS think about that? If the IRS said that the meals were not deductible, what would the courts say? You would think there are hundreds of rulings and court cases that explain this. Not so. There is one tax rule that mostly assures the deduction, but it requires an addition. Spend a few minutes learning how tax law treats your spouse when it comes to business meals.

When you incorporate your business, you have to decide which assets you want to contribute to your new corporation and which you want to keep in your own name. For some assets, you get better tax benefits and better liability protection when you don’t transfer them to your corporation.

For tax years’ beginning after December 31, 2013, Obamacare contains good and bad news for Section 105 medical reimbursement plans—health reimbursement accounts (HRAs). Bad news: the new health law requires that you pay for group health insurance if you want a Section 105 plan for more than one employee. Good news: with one employee only, such as your employee-spouse or yourself if you operate as a C corporation, you don’t have to buy group health and you can reimburse expenses as you always have.

Are you thinking of converting your business to an S corporation? The IRS will be watching you closely. Learn to avoid the common mistakes that many business owners make.

If you and your spouse work together in your business, you need to know the rules of the road for owning and operating your proprietorship, limited liability company, or corporation. In part 1 of this article we discussed how you can save both self-employment and income taxes with the right mix of income and employee status of your spouse. In this part 2, you learn what you need to do to ensure that your operating business entity allows you to achieve the benefits of part 1.

Your husband-and-wife business may already be a success. That’s great. Now, with a little tax planning for the husband-and-wife business, you can increase your after-tax profits and sleep better at night knowing that your business form is good.

New guidance from the IRS on the new health care law says the owner of a business (proprietorship, corporation, LLC, etc.) may not claim the 35 percent tax credit on the health insurance premiums paid to cover his or her spouse.

The new health care law grants a nice tax credit to business owners who cover their employees. How about the owners themselves? Lawmakers did them no favors, but one group of proprietors might catch a break.

Tax law favors the son or daughter working for the mother or father in a proprietorship or husband and wife partnership. If you operate your business as a corporation, you also can come out ahead by hiring your child.

Having your child work in your business produces college funding strategies with both the Roth and the traditional IRA. As an added bonus, you can use the traditional IRA with earned income to eliminate some kiddie tax.

The woman in this audit learned how knowledge can turn what appears as a nightmare (an IRS audit) into a positive happening—meaning cash refunds for the year of the audit and subsequent years. As the old sayings goes, “knowledge is power.”

The Heineman case gives a roadmap to how a husband and wife might deduct the cost of attending a board of directors meeting where they are the only participants. Using the principles enunciated in Heineman, husband-and-wife corporate owners will find deducting the out-of-town board meeting easier than deducting board meetings that occur in town.

Use this Section 105 medical reimbursement plan template to make sure you provide maximum medical benefits to you and your family while legally discriminating under both tax law and ERISA rules.

You are talking to yourself (for tax purposes) when you discuss business with your husband over dinner. This is a nondeductible experience.

When husband and wife receive individual 1099s from the same firm, they generally can improve their after-tax cash results by having one spouse earn the 1099 income and having the other spouse work as an employee.

In an ISP, the IRS asserted that the Section 105 medical reimbursement plan may not reimburse the employee-spouse for the cost of health insurance purchased in the employee-owner’s name. This court case held that this IRS position is wrong and that the owner may deduct the cost of medical insurance purchased in his name when that insurance is covered by the Section 105 medical reimbursement plan.

Answering “yes” to the 11 puts you on the road to audit-proof status for your Section 105 medical reimbursement plan.

The husband and wife who work together must consider the joint venture election if they want the business treated by the IRS the way they think it should be treated.

The combination of a Section 105 medical plan and a $15,500 salary to the spouse generated a $32,875 tax deduction for the business, no taxable income for the spouse, and a cash contribution to the spouse’s 401(k) retirement account of $19,375.

The new Iraq war funding law contains a new tax law section on “family business tax simplification.” If you and your spouse work together in the business, it is time to pay attention and examine this new law.

As owners of an S corporation, you probably are allowed to forego the stockholders’ and directors’ meetings. However, you may not want to. By skipping these meetings and other “corporate” activities, you appear less like a corporation in the eyes of the law.

Incorporated and unincorporated businesses can use the solo 401(k) to benefit the owner (including a husband and wife). In most cases, the solo 401(k) allows the one-owner or husband-and-wife owners to put away more than they could in other plans (up to $49,000 this year, depending on age and earnings—adjusted for inflation in future years).

To treat your rental property as a tax shelter and deduct your rental property losses against non-passive income, you first need classification as a real estate professional and then you need material participation on the individual properties, or if grouped, on the group. Good and proper tracking of time spent by you and, if married, your spouse is required to prove both your real estate professional status and material participation.

When the husband and wife work together in the business, but report that business on one Schedule C, they create a tax problem for themselves. Is this a partnership or joint venture where both husband and wife have earned income subject to self-employment taxes? You can avoid this problem by hiring the spouse not reporting on a Schedule C. You then can avoid payroll taxes on the wages to the employee-spouse by making the compensation non-W-2 income.

The expansion of the kiddie tax to children under the age of 18 has zero negative effect on the hire-your-child strategy.

The one-owner or husband-and-wife owned businesses can gain significant income by learning how to reduce the largest expense they pay during their lifetimes (taxes). In this respect, the self-employed are both cursed and blessed. Cursed because they pay a larger percentage of their net income in taxes than anyone else in the country. Blessed with business deductions that, when used properly, not only balance their taxes with those of the average employee, but actually mean (if they are paying attention) that they pay a whole lot less.

The IRS fulfilled its promise and audited twice as many Form 1040-Schedule C taxpayers and S corporation returns. Your odds of audit vary by both choice of entity and gross receipts in that entity.