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Health care matters not just for you but also for your business. In this episode, we examine how employers can set up medical plans based on their business structure and what strategies to apply to save on taxes.
[01:28] Self-Employed Health Insurance Deduction
- If you're self-employed, you will always get a business deduction for the health insurance costs that you incur
- For Sole Proprietorship or Single Member LLC: deduct self-employed health insurance premiums on Schedule 1 of your personal tax return (1040)
- For S Corporation Owner:
- Have the S Corp pay for the insurance
- Add it to your W2 payroll as S Corp owner self-employed health insurance. Your payroll provider should know how to handle this.
- Deduct on your personal tax return (Schedule 1)
- If you are providing health insurance for non-owner employees, include those on their W2, in Box 12 with code DD
[04:21] Options Available to Business Owners With High Medical Costs
- You can utilize a Section 105 plan to turn personal medical expenses into a business deduction and be able to reimburse employees for medical costs incurred
[06:16] Options are Available for Small Businesses With Employees
- Some options are: group health insurance, increased wages, HRA or QSEHRA
- For small businesses with less than 50 full-time employees that don't offer a group health insurance policy:
- With a QSEHRA, employers reimburse employees tax-free for medical expenses
- You can offer yearly allowances of up to $5,450 for single employees and $11,050 for employees with a family
[10:27] What Is An HSA and How Do They Work?
- If you contribute to an HSA, withdrawals are tax-free when used for qualified medical expenses and interest or earnings are NOT taxed
- The maximum you can contribute to an HSA for 2022 is $3,650 for self-only or $7,300 for families
- An HSA is a great savings vehicle because there is no tax on the interest or gains earned within it
[13:00] Final Thoughts
- Start thinking about these health insurance options and be on top of tax planning
Key Quotes
“Taking care of your health is so important, and oftentimes as a busy professional, that's something that gets put to the side. And so there's also tax planning that comes into play when we talk about various aspects of health.” - Mike Jesowshek
“I was afraid to bring employees simply because of this little piece of medical. I was afraid would cost too much. But there are options out there.” - Mike Jesowshek
Resources Mentioned
Blog Posts:
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Podcast Host: Mike Jesowshek, CPA - Founder and Host of Small Business Tax Savings Podcast
Join Our Tax Minimization Program: https://www.taxsavingspodcast.com/tax
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Podcast Website: https://www.TaxSavingsPodcast.com
Facebook Group: https://www.facebook.com/groups/taxsavings/
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