Save money on taxes by hiring spouse

WASHINGTON -- Jan. 31, 2006 -- Self-employed practitioners may want to consider hiring a spouse or partner to help with their business, even on a minimal basis, for the tax advantage this structure can provide.

The U.S. Internal Revenue Service allows self-employed people to hire their spouse or partner for business assistance, pay the person a salary (which can be a nominal amount, as low as $250 per month), and then reimburse the employee for all family medical expenses, according to a recent report in a Greater Capitol Area Association of Realtors®’ member newsletter.

Under the plan, business owners can write off reimbursement paid to their spouse or partner as a business expense. Most families can save between $2,500 and $4,500 on their taxes this way, according to Linda de Marlor, president of Tax-Masters Inc.

Medical expenses include health care premiums, long-term care insurance, over-the-counter medicine, first-aid supplies, elective surgeries and dental expenses such as orthodontics, de Marlor notes.

Practitioners interested in taking advantage of this plan for 2006 must have it in place before Dec. 31.

Source: Realtor® Magazine Online, Michele Lerner, Jan. 30, 2006

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