February 2025
1. Pay Your Spouse Tax-Free Employee Benefits, Not Taxable Wages.
You won't get any tax savings if you put your spouse on the payroll and pay him or her cash wages. Employee wages you pay your spouse are fully taxable.
2. Establish a Medical Reimbursement Arrangement.
Health benefits are normally the largest tax-free employee fringe benefit you can provide your spouse. The 105-HRA creates these tax savings every year!
3. Take Advantage of Certain Other Fringe Benefits
There are other tax-free employee fringe benefits you can provide your spouse. These include education, life insurance, and more. These and others are valuable benefits that I'll explain fully.
4. Beware of Certain Tax-Free Benefits
Watch out for the Section 127 education plan. The law prohibits Section 127 benefits to your spouse and dependents under the 5% ownership test. And that's just for starters.
5. Make Sure Your Spouse Is Your Bona Fide Employee
The IRS usually attacks spouse-employee deductions for health insurance and other expenses by claiming the spouse is not a bona fide employee. Get this right!
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