I was curious if anyone on the site (incl Jim Dahle) have gone through the formal process of hiring a spouse on paper and what are the steps and documents needed to set this up legitimately, and I had an additional question about Section 105 plans.
My wife and I are both doctors and it would be reasonable for me to hire her for medical opinions in certain cases. (I have a full-time W-2 job but also have 1099 income from moonlighting as a Sole Proprietor/Independent Contractor, so the 1099 business income is what I am referring to. I just report it on Schedule C each year in TurboTax.) Also, my wife has some medical expenses that aren't covered by insurance, so I was thinking of setting up a Section 105 plan to pay these pre-tax. This web site is a pretty good outline of what I'm talking about:
http://pwbcpas.com/blog/2015/09/02/a-tax-smart-strategy-hire-your-spouse/
I think their strategy is very interesting, of treating the medical payments as the compensation, therefore no payroll or other taxes are due. They even cite a 2006 court case in which this approach was tested and found to be solid (IRS challenged and lost on all counts).
Has anyone else done this? If I want to actually/legitimately do this, can I do it on my own by just downloading all the documents from some business planning web site and filling out/signing them myself, or do I need to hire a lawyer (hoping the former)? Thanks!
My wife and I are both doctors and it would be reasonable for me to hire her for medical opinions in certain cases. (I have a full-time W-2 job but also have 1099 income from moonlighting as a Sole Proprietor/Independent Contractor, so the 1099 business income is what I am referring to. I just report it on Schedule C each year in TurboTax.) Also, my wife has some medical expenses that aren't covered by insurance, so I was thinking of setting up a Section 105 plan to pay these pre-tax. This web site is a pretty good outline of what I'm talking about:
http://pwbcpas.com/blog/2015/09/02/a-tax-smart-strategy-hire-your-spouse/
I think their strategy is very interesting, of treating the medical payments as the compensation, therefore no payroll or other taxes are due. They even cite a 2006 court case in which this approach was tested and found to be solid (IRS challenged and lost on all counts).
Has anyone else done this? If I want to actually/legitimately do this, can I do it on my own by just downloading all the documents from some business planning web site and filling out/signing them myself, or do I need to hire a lawyer (hoping the former)? Thanks!
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