10
OWNERS’ FRINGE BENEFITS, RETIREMENT, AND TAX DEFERMENT
Income tax is the fine you pay for thriving so fast.
—TOM ANTION
There are wonderful benefits to being in business for yourself. You may spend as much as you like, to improve yourself, educate yourself, care for your health, and plan for your ultimate triumphant retirement. While I won’t cover all the potential benefits here, I will include some options you won’t find anywhere else. For the ones everyone covers—you know the usual suspects—simply go to an Internet search engine (such as http://www.google.com) and type in “fringe benefits.”
Fringe Benefits and Reimbursements
When you’re an employee in a responsible position in a large corporation, you are always offered an array of fringe benefits to induce you to take the job—or to stay on the job. You get vacation, sick time, bonuses, stock options, medical plans, and various reimbursement plans for things like child care, education, auto, and meals. Your employer pays for all that.
Having your own company means you may offer those things to your employees. (See Chapter 9.) But if you get them, the cost for them comes out of your own pocket. On the other hand, if you handle the benefits properly, Uncle Sam will pick up a nice part of the freight.
Health Insurance
Alert! Before we even get started on this topic, let me warn you that I will not be providing a lot of information about the Obamacare rules and how they apply to your business. Instead, I am going to point you to the government website that deals with the Obamacare rules. Employers are now able to get healthcare coverage for their employees from the Marketplace: https://www.healthcare.gov/small-businesses/. But, if you have nonfamily employees, I urge you to sit down with an expert in this area because there’s a lot to know, way more than I can possibly fit into a single chapter. (Besides, I am still learning new nuances and pitfalls every day.)
The form of business you’ve chosen (see Chapter 3) will govern whether or not your insurance expenses are deductible in your business. C corporations get to deduct all employee fringe benefits, and as an employee of your own C corporation, you’re treated the same way as other employees. On the other hand, when you’re self-employed, in a partnership, or in an S corporation, you don’t get a business deduction.1 You may deduct your family’s health insurance costs on page 1 of your tax return, as an adjustment to income. If you have an S corporation, this doesn’t matter as much, because you’re not paying self-employment taxes on your profits. But when your income is on your Schedule C or through a partnership (or LLC filing as a partnership), all your profit is subject to an extra 15.3 percent levy for Social Security and Medicare taxes.
Not being able to deduct your family’s medical insurance costs of $650 per month from your Schedule C business or partnership costs you nearly $1,200 extra in taxes each year. Toss in the cost of routine out-of-pocket medical expenses (braces, contacts, eyeglasses, annual checkups, co-pays), which might average another $1,500 for a family of three. Your overall extra taxes are nearly $1,500 per year from self-employment taxes alone.
You may provide insurance coverage for your dependents until they reach age 26, as a result of the Affordable Care Act of 2010. More about that in a moment.
Health Savings Accounts
Congress voted health savings accounts (HSAs) into law on December 8, 2003. By now, coverage is easy to find. To help you find insurance carriers for these plans in your state, eHealthInsurance.com put up a special section on its website at https://www.ehealthinsurance.com/hsa.
What’s so special about these accounts? Your medical insurance costs are cut because your deductible must be at least $1,300 for an individual or $2,600 for a family (revised annually for inflation). Your medical expenses drop for two reasons:
1. Premiums decrease when your deductible increases.
2. There are limits to your out-of-pocket expenses. Your annual maximum out-of-pocket expenses are limited to $6,450 for an individual or $12,900 for a family.
A health savings account is something like an IRA. The money you deposit is deductible in the current year. You can draw out that money to pay for medical expenses, tax-free. Or if you and your family are generally healthy, you can leave the money invested for years. Draw it when you really need the money to cover medical expenses, or wait until you get old and infirm and need to spend money on in-home care or long-term care. Or just draw it out and pay taxes on it, like an IRA.
Be very careful about the funds you draw from your HSA. Your administrator will give you a credit card that allows you to pay your medical care providers and pharmacist. Please don’t think that everything you buy at the pharmacy qualifies as an allowable medical expense. After all, in my pharmacy, I can buy gifts, makeup, potato chips, and lots of other nonmedical junk. Whenever you spend money from that account during the year, you will have to report how that money was used on Form 8889 (https://www.irs.gov/pub/irs-pdf/f8889.pdf). Save all the receipts. One of my clients was recently audited. It turned out fine, but we had a few panicky moments there for a while. Her therapeutic masseuse, prescribed by her physician, had changed the name of her business to something very New-Agey. As a result, we had to get proof that she really was licensed as a physical therapist.
For more information, refer to my website at http://taxmama.com/insurance/hsa.
Code Section 105 Medical Reimbursement Plans
Created for farming families whose lives are closely tied to their businesses, this is a special provision of the tax code. It provides a way for family businesses to deduct all the medical insurance and medical expenses for family members from their business returns, just the way you can for your employees. The plan is based on the premise that you can hire your spouse, paying him or her a salary. The family medical plan is part of the compensation. There are stringent rules to follow, including having a plan document and keeping records of all the expenses and reimbursements. You could do it yourself or with the help of your tax professional. You can also contact the Agri-BizPlanNOW folks at TASC. You can reach them at (888) 595-2661, extension 17732. They pretty much own this niche, so they are quite efficient and reasonably priced. For more information, go to https://www.tasconline.com/products/bizplan/section-105-plan/.
If you prefer to do it yourself, you will need a plan document. You may adapt the one on A/N Group, Inc.’s website for your own company (http://www.smbiz.com/sbfrm002.html). Make sure you don’t issue reimbursement checks to your spouse or your employees unless you have a copy of the medical receipt in your hands—and it qualifies as a medical deduction.2 Keep separate files for each employee and separate files for each year—either with tabs or using different folders for each year.
However, I strongly advise you to turn over the administration of your plan to someone experienced with the details of compliance. Avoid this extra stress. You’re much better off using your time to generate income in your business.
Since Section 105 lets your business deduct all the family medical expenses, not just the insurance premiums, the savings are substantial.
The Section 105 Plan in Action
Ward Cleaver is self-employed by his California business. He hires his wife, June, to answer his phones at his office. He pays her a modest salary, so she has some spending money—$500 per month. In addition to the salary, he sets up a Section 105 plan, giving his entire family full medical coverage. The insurance premiums are $1,200 per month for the family of four ($14,400 per year). Ward and June pay another $125 per each family member for dental and visual insurance ($500 per year). Even with the dental insurance providing $1,500 toward Beaver’s braces, the Cleavers are still paying $3,000 out of their pockets. Beaver’s scrapes and Wally’s sports activities usually result in a few hospital visits, generally at least $500 per year. Ward and June’s annual checkups and co-pays usually add up to $500 per year. And they spend an additional $500 on Ward’s eyeglasses and prescription sunglasses and June’s contacts each year. The medical benefits added $19,400 to June’s compensation. Since the $19,400 was not subject to employment tax or income tax, it saves the Cleaver family over $9,600 in taxes (15.3 percent self-employment tax, 25 percent IRS tax, 9.3 percent state tax = 49.6 percent).
Without the Section 105 plan, they would only have been able to deduct the medical insurance, on page 1 of Form 1040. This reduces the Cleavers’ taxes by about $4,900 ($14,400 × 34.3 percent, rounded). As for the other $5,000 of medical expenses, Ward’s income was too high (more than $66,000) to itemize any of it. The Section 105 plan saved the Cleavers more than $4,700.
The Affordable Care Act of 2010
Ever since 2010, as a small employer, you may take a tax credit if you are paying at least 50 percent of your employees’ health insurance costs. The credit is as high as 50 percent (35 percent for exempt organizations). If your spouse or children are your employees—or if you are employed by your corporation—this may apply to you. Watch out, though; the average annual wages of your employees, including yourself, must be under $50,000. The IRS provides details and information on how this works, and how it ties into the Health Care Marketplace—http://iTaxMama.com/Employer_HealthCareCredit.
Adoption Credits
As an employer, you may pay all or most of the adoption expenses of your addition to your family, as a nontaxable employee benefit. The limits change each year. For 2016, the amount is $13,460. There is both an adoption credit and an adoption expense. The expense allows employers to pay this benefit to their employees. So it can be an employee benefit for a spouse in a sole proprietorship or partnership, if a spouse is an employee. Or it may be an employee benefit to a shareholder-owner in a corporation. In addition to employer-provided benefit, if the adoption costs exceed the $13,460, the new parent may get a tax credit for up to $13,460 on Form 8839—https://www.irs.gov/pub/irs-pdf/f8839.pdf. For more information, visit IRS Topic 607—https://www.irs.gov/taxtopics/tc607.html.
Employer-Provided Childcare Facilities Credit
Hardly any small businesses even know about this excellent way to reduce your taxes if you have a child. The IRS will give you up to 25 percent of the cost of a qualified childcare facility for your children—or your employees’ children—to a maximum of $150,000 per year. Unused credits may be carried to the future for up to 20 years. That doesn’t mean you have to set up your own childcare facility. You can get the credit for paying an existing facility for childcare, as long as it’s licensed and meets all the IRS’s rules for such facilities. The employer must pay the facility directly; reimbursements are not permitted. Use Form 8882, available at https://www.irs.gov/pub/irs-pdf/f8882.pdf.
You can get another 10 percent credit for the cost of having your child evaluated by an expert to help determine the appropriate childcare facility for your child. This need will usually come into play if your child seems to have trouble learning or adapting to other children.
Your state might have similar credits. For instance, California used to have a 30 percent credit. Although it’s no longer available here, something like this might be available in your state. Ask! Just think, if you lived in a state with this credit, and paid $300 per month for your child’s care, your tax credit would be $1,080. In addition, the business gets the deduction of $2,520 (total cost of $3,600 reduced by the credit of $1,080). That deduction is worth about $1,140 more (15.3 percent self-employment tax, 25 percent IRS tax, and 5 percent state tax). You’ve just saved over $3,120 of the $3,600 costs of your child’s daycare ($900 IRS credit, $1,140 deduction, plus $1,080 state credit).
Life Insurance
Typically, life insurance is not a deductible expense—certainly not when it is for the benefit of the owner of the business. In a C corporation, though, you may deduct the cost of up to $50,000 coverage for each employee, including the shareholders and officers working for the corporation. Check with your tax professional to see if there are other ways to include life insurance in your business and make it deductible. The corporation may pay for much more coverage, if it chooses, but the additional premiums are added to the employees’ wages.
Employee Leasing and Trusts
There are ways to use trusts and employee leasing arrangements to generate substantial deductions—and to avoid time-consuming administration issues. This is also a way to move employees out of your pension plan and into one of their own, requiring lower contributions by you. For companies with high profits where the owners are trying to put maximum contributions into their own retirement plans, using an employee leasing service gets around the ERISA rules. That’s advanced tax planning, with both benefits and pitfalls, often requiring the services of a sophisticated tax attorney.
Education
Naturally, your business may deduct the cost of all courses you or your staff take to increase your professional or trade expertise related to your business or industry. Management and business courses and seminars are deductible. When it comes to courses taken in order to get a college degree, you may have to fight to win those deductions. Individual courses related directly to what you need to know for your business can probably be deducted. But those anthropology courses? For a plumber . . . well, I don’t think so. You get the idea.
In Chapter 6, we pointed to a Tax Court case in 2010 that clarified some of the issues that determine whether or not you can deduct your education. Lori Singleton- Clarke, a nurse, objected to the IRS’s decision in her audit and presented her own case to the Tax Court—and won an impressive decision. You can read about the logic used by the court in TaxMama’s AccountingWeb.com blog (http://iTaxMama.com/Deduct_MBA).
Your company may offer an education assistance plan, reimbursing employees for up to $5,250 of annual education expenses.3 Even graduate-level courses qualify. Before 2002, only courses up to a bachelor’s degree or a certificate program were allowable. If you are a C corporation, the cost of your education expenses for a degree may be reimbursed, along with those taken by other employees. However, in an S corporation or other entity, nope. You may, of course, deduct the cost of specific seminars or workshops for your industry—just not the cost of the rest of the courses leading to a degree. Unless, of course, you can prove that your degree, like Ms. Singleton-Clarke’s, qualifies for the education deduction. You may hire your spouse or children. If they legitimately work for the business, like any other arm’s-length employee, you may be able to reimburse their education expenses as part of their employee compensation. This may be iffy in an S corporation. Since your family members are related parties, the IRS treats them as owning the business, too. Definitely clear this with your tax professional before including it in your business plan, especially because this is an area of tax law that may change soon.
What expenses are deductible when it comes to education? The cost of books, tuition, fees, tools, and supplies related to the course. Sometimes, even computers are deductible. Travel to the course or seminar is also included as well as meals, if you are gone overnight. There’s a broad definition for tools. But if you’re studying construction and your class project is to build a house and you build one for yourself . . . I don’t think you’ll be able to deduct the costs as education expenses. So be reasonable when you take deductions on your tax return.
Courses to qualify you for a new business or a new profession aren’t deductible. For instance, if I were working for a certified public accounting firm and wanted to take a CPA review course, that wouldn’t be deductible for me. Even if I took the course and passed, and I continued to do exactly the same job as before, as if nothing had changed, it would not be deductible. The IRS considers CPAs a different profession than simply a degreed accountant. However, individual courses relating to accounting and tax topics would be deductible. Look at your industry and see how that relates.
In addition to being able to provide up to $5,250 worth of reimbursements to your employees (including family employees), as an employer, you may pay for courses directly related to your business. For instance, I pay for continuing education courses for my long-term staff. When appropriate, I also pay for their travel and lodging. For instance, you will find us in Las Vegas each year at the IRS Tax Forums or the NAEA or NATP Seminars.
Education deductions can be lucrative—or they can be dangerous. However, for the next few years, even if you can’t use the deductions as business expenses, you have education credits and above-the-line deductions available to use. The American Opportunity Credit is worth up to $2,500 per eligible student; the Lifetime Learning Credit is worth up to $1,000 per person for up to two people per tax return. See Publication 970, which you can access at https://www.irs.gov/publications/p970/, provides current information.
Don’t forget about the working benefit fringe—that’s a nice little secret allowing you, the employer, to pay more than just $5,250 toward your employees’ education. (Think—your spouse or child working for your business.) When the education payments qualify as a working benefit fringe, none of the payments are taxable to the employee—even if the employer pays out $30,000 or more. How do you get that? Well, there must be a written plan, the benefit must be available to all employees, without favoring “highly compensated employees,” and it must cover practically all costs, except for tools and supplies that employees get to keep after the course ends. Alas, it cannot cover the owners of the business. But even small businesses can offer this benefit, say, to family members who don’t meet the definition of “related parties” when it comes to ownership of the business.
Retirement Plans
The good news is, if your business follows your business plan, you’ll be making lots of money and living well. The bad news is, you won’t die young. At least, so says the Centers for Disease Control (CDC).4 The CDC’s 2014 projections say you’ll live until age 78.8. That looks like a long time from now, doesn’t it?
News flash. It sneaks up on you faster than you can imagine. I was just 24 last week. Or so it seems. I blinked and more than two decades passed. Looking around at friends, family, and clients, many are living well into their eighties and nineties. In fact, have you seen Raquel Welch on the red carpet lately?—http://pagesix.com/2015/12/10/raquel-welch-is-flawless-at-75/. At age 75, she is looking stunning! May we all look that good and be that healthy at her age. If we’re going to live a long, healthy life, we’d better look toward saving for our own longevity.
Retirement Basics You Must Know
Each investment vehicle has contribution limits based on your income, except the SIMPLE-IRA. In general, if you (or your spouse) have a job with a retirement plan, your contribution to any plans related to an IRA (individual retirement account) will be limited.
You may contribute $1,000 to $2,500 extra per year if you’re age 50 or over, depending on the plan. These contributions are called catch-up contributions. All contribution amounts, catch-ups, and income limits change based on inflation or congressional rules.
You may not put money into all these retirement vehicles at once. Putting money into one will generally conflict with your right to fund one of the other retirement options—so pick the optimum retirement plan(s) for your business.
A common misconception is that these plans are investments. The plans themselves are not. They are vehicles (or buckets) into which you put money. You may open these plans with banks, brokerages, perhaps even with insurance companies. Once you open the account, the brokerages and mutual fund companies let you diversify and manage your investments. You control the rate of the return by watching the appropriate market. You may move the funds from one company to another—as long as they stay within the same investment vehicle.
All the plan descriptions assume you have no employees. If you have any, please see a good local tax professional who understands qualified and nonqualified plans. And if that person doesn’t know what those terms mean, go somewhere else.
Tax-Free Retirement
Tax-free means you’ll never have to pay tax on the money when you take it out. You also don’t generally get a deduction for your deposits when you make them, though. Table 10.1 provides an overview of the tax-free plans. Here are the details of some plans available to small business owners.
TABLE 10.1 Tax-Free Retirement and Savings Plans Available in 2016
Roth IRAs. For any year, contributions to Roth IRAs must be deposited by April 15 of the following year (or the first business day after April 15th, if it falls on a weekend or holiday). For 2016, for example, you may contribute up to $5,500, plus a catch-up of $1,000 by April 17, 2017.
There is no deduction for the amount you contribute to a Roth IRA. Obey the rules—you’ll get all the money out tax-free when you retire. You may only draw the money out of your own account when you and your spouse are each over age 59½ and you’ve left the money in the account for 5 years. In times when investments do well, this is a very appealing investment. For young people, whose money will grow in these IRA accounts for 15 or 20 years, this option can yield a generous source of tax-free money in the future.
Why doesn’t everyone use it? Several reasons:
• The contribution allowed is low.
• The income limits to qualify are low.
• Roths are a nuisance to fix if you contribute when your income is too high.
Section 529 College Education Plans. In 2016, you may contribute up to $14,000 per beneficiary, per year.5 Or in the first year, you may deposit up to $70,000, using up five years’ contributions at once. Contributions must be made by December 31 of the plan’s year. Section 529 plans are unique because, although you are gifting a fortune to your child, relative, or friend, you still have control of this asset. At any time you choose, you may pull it back into your own estate and keep the money. Or if your beneficiary doesn’t use up all the money, you may either transfer it to another student or take it back. The money may be spent on tuition, fees, books, supplies, room, and board—as long as the school is on the approved list. As a result of the PATH Act of 2015, you may also use the money for computer equipment and technology.
You’re saying 529s are not really retirement plans? My approach is indeed novel. No one else has written about this—but it was cleared with the IRS on May 13, 2004. The IRS agrees it’s legal. If you are related to the beneficiary, you may transfer the money to yourself as the new beneficiary, even if you’re a senior citizen. Once in your name, you’re free to use that money to get educated—taking courses on cruise ships, traveling across Europe or wherever, including most expenses and course supplies for accredited schools. Just think—gourmet cooking school, scuba training, professional golf college . . . what have you always wanted to learn?
Your Home: A Tax-Free Strategy. Buy a home and build equity. You may sell a home every two years and keep up to $250,000 ($500,000 for couples) tax-free. Use the proceeds to buy the next home in a rapidly appreciating area. Repeat every few years. Ten years before you plan to retire, accelerate the mortgage payments so you pay off the loan entirely. If your profits look as if they’ll be more than $500,000, add your children, living at home, to the title. Each owner gets that $250,000 exclusion. Along the way, you collected lots of money to use either toward a better house or toward funding your retirement plans, or both. Once retired, you’ll have no mortgage payments, so if anything goes wrong with your retirement accounts (as happened to many in April 2000, and again in 2009 and 2010), you’ll still be fine. If you ever need money, simply make sure to establish a home equity line of credit (HELOC). A home equity line costs little or nothing to have. You only pay interest on any money you borrow—usually at favorable rates.
Tax-Deferred Opportunities
Tax-deferred means you get a deduction or credit for your contributions now, when you deposit the money. But you’ll pay tax on all the money when you take it out.
There is a whole menu of retirement savings opportunities, but they’re deceptively complicated. Many have income limits and strings attached. Use Table 10.2 as a starting point. Discuss the options with your own tax pro. Table 10.2 provides an overview of tax-deferred plans. Here are the details of some plans available to small business owners.
TABLE 10.2 Tax-Deferred Retirement and Savings Plans Available in 2016
Savings Incentive Match Plan for Employees (SIMPLE IRAs)
You may contribute up to $12,500 plus $3,000 catch-up in 2016. You may contribute your entire profit, or wages from your own corporation or LLC, up to those limits. The money must be deposited by December 31st. As your own employer, you must also make a matching contribution of 3 percent of your wages or profits. The matching contribution may be funded when you file your tax return. The plan must be opened by September 30th of the year, to use it in that same year.
Simplified Employee Pension (SEP-IRA)
You may fund 25 percent of your net profits or wages from your own business, up to $53,000, into an SEP-IRA. You may set up and fund SEP-IRAs until the due date of your tax return, including extensions. This is the only retirement plan that allows you to open it and fund it that late into the year. For folks with large profits, this is the best way to reduce some of the tax hit for the previous year.
Special strategy tip: If you don’t really have the spare cash to fund the SEP-IRA, here’s how you can get around it if you don’t have employees who qualify for a pension contribution. Open a solo 401(k), effective for the current tax year, as we will discuss soon. Open and fund the SEP-IRA for the previous year. Give it a few weeks. Then roll the funds into the new solo 401(k). You may borrow up to 50 percent of the account balance up to $50,000 from your solo 401(k). So you can fund your SEP-IRA, but get the money right back if you need it.
Solo 401(k)s
These are like the regular 401(k)s you might get from an employer—only much better. You have the same contribution limits as the SEP-IRA—$53,000 (plus the $6,000 catch-up). But the percentages are more generous. At lower levels of income, you may contribute 100 percent of your wages. The best part about these plans is that you may roll over your funds from your existing IRA into a solo 401(k) account. Then you may borrow up to 50 percent of the account balance, or up to $50,000. This is the only account that lets you and your spouse (and even your children if they are employees) get the maximum tax benefit—but still gives you access to your money. If each of them works for you and owns shares in the company, they may each have their own plan. That means, in a couple of years, you could have access to $100,000 or more easy capital (your account and your spouse’s). You may borrow the money without penalties or taxes, as long as you honor the payment plan—and don’t shut down the business. Otherwise, you will face early withdrawal penalties and taxes if you don’t pay it back.
Defined Benefit Plans
Defined benefit plans are a different animal and require some long-term planning. The concept is to provide you with a specific monthly payout when you retire. To get that payout later, how much do you have to put away now? The older you are, the more you get to put away. The computation is predicated on the three highest consecutive earnings years based on income or wages from your business. The annual benefit limit for 2016 is $265,000. You may contribute as much as 100 percent of those wages to achieve the benefit limit. The plan must be opened before December 31st of the year for which you want to contribute, but it may be funded until you file your tax return, including extensions.
This is an excellent option for anyone wanting to build up plan assets quickly and get immediate deductions for the contributions. This is especially valuable for folks closer to retirement age. The biggest objection to these plans is that once you set them up, you are obligated to make the annual payment to cover the defined benefit, even if your business doesn’t have the money to cover the costs. So what do you do in lean years? Suspend the plan. But be very careful how you handle this. If you get your timing wrong, the whole plan is invalid and may be subject to penalties. Work with a tax planning professional who really understands this area well. Not all do. And stay with that tax professional, when it comes to dealing with this plan, until you retire. So be very discerning about whom you choose.
A good tax professional, whether it’s an attorney, an enrolled agent, or a certified public accountant, can help you devise the best way to set aside money for the future by letting Uncle Sam give you tax breaks. This will cut the financial pinch so you can live well now—and when you’re age 77.
One last caveat: limits and benefits change all the time. So if you build a retirement plan, be sure to get your professional or trade organization, friends, contacts, chamber colleagues, and family to lobby Congress to keep the provisions intact.
Using the IRS to Your Advantage
Clearly, with the right kind of planning, you can practically wipe out your present tax obligation or at least move much of it to your retirement years, when your earnings are likely to be lower; although I’m finding that many of my clients’ earnings are higher during their nonworking years than they were when they were struggling. A nice surprise.
One of the nice surprises they’ve gotten is Social Security. They didn’t really expect it to still be there for them. So let’s just address that for a moment. In all our efforts, we’ve done our best to reduce or eliminate the self-employment taxes paid in. You may want to rethink that strategy.
For those of you who have not built up your Social Security account, you may want to pay in for a while. This may be especially important to immigrants who don’t have their 40 quarters paid in through jobs. Have your tax professional help you develop a balanced strategy that cuts your taxes, increases your retirement income—and also ensures that you get the most out of Social Security when you retire.
Benefits Resources
• U.S. Treasury Resource. https://www.treasury.gov/resource-center/faqs/Taxes/Pages/Health-Savings-Accounts.aspx. All about health savings accounts.
• Section 105 Medical Reimbursement Plan document. http://www.smbiz.com/sbfrm002.html.
• TASC’s Agri-BizPlanNOW. https://www.tasconline.com/products/bizplan/section-105-plan/, (888) 595-2661, extension 17732.
• Explanation of health savings accounts (HSAs). http://taxmama.com/insurance/hsa.
• eHealthInsurance.com. http://www.ehealthinsurance.com. Look at the special section for health savings accounts at http://www.ehealthinsurance.com/hsa.
• Adoption—IRS Topic 607. https://www.irs.gov/taxtopics/tc607.html.
• Adoption credit. https://www.irs.gov/pub/irs-pdf/f8839.pdf.
• TaxMama’s AccountingWeb.com blog article about how the nurse won the right to deduct her MBA. http://iTaxMama.com/Deduct_MBA.
• Employer-provided child-care facilities credit. https://www.irs.gov/pub/irs-pdf/f8882.pdf.
• IRS Publication 970, Tax Benefits for Education. https://www.irs.gov/publications/p970/ for education fringe benefits.
• SEP Retirement Plans for Small Businesses. https://www.dol.gov/sites/default/files/ebsa/about-ebsa/our-activities/resource-center/publications/sep.pdf.
• IRS information on S Corporations and Health Insurance. http://iTaxMama.com/S-Corp_Health.
• IRS information about the Small Business Health Care Tax Credit and the SHOP Marketplace. http://iTaxMama.com/Employer_HealthCareCredit.
• The Federal Health Care Marketplace Business area. https://www.healthcare.gov/small-businesses/.
• The 401K Help Center. http://www.401khelpcenter.com/2016_401k_plan_limits.html#.V9RFCKKNF8o. The 401k Help Center’s chart compares contribution limits to various plans for self-employed and incorporated businesses.
• CNNMoney.com retirement calculator. http://money.cnn.com/retirement/tools/index.html.
• TaxMama’s overview of the Health Reform portion of the Affordable Care Act of 2010 and updates. http://taxquips.com/1/Summary_TaxMama.xls. You will find a breakdown by year for individuals and businesses. This is updated as changes occur.
• TaxMama’s Quick Look-Ups. http://iTaxMama.com/TM_QuickLookUp. You will find all kinds of useful reference materials, webinars you can replay, e-books, and more.
• Your Business Bible. http://www.yourbusinessbible.com. Look for worksheets, printable checklists, and other goodies and resources.
1 You may have seen a company pay the officers’ medical insurance or expenses in an S corporation. The money must be added to the wages as additional compensation. Or it is treated as dividends or as repayments of loans to the officers. http://iTaxMama.com/S-Corp_Health.
2 For medical expenses, see IRS Publication 502 at https://www.irs.gov/publications/p502/index.html.
3 See IRS Publication 970 for education fringe benefits: https://www.irs.gov/publications/p970/ch12.html.
4 Fast stats on average life expectancy can be found at http://www.cdc.gov/nchs/fastats/life-expectancy.htm.
5 The annual contribution limit is the amount of the annual gift tax exclusion—the amount of money you may give a person as a gift without paying a gift tax on it. https://www.thebalance.com/annual-exclusion-from-gift-taxes-3505637.