TMTW # 116 – Hire Your Spouse

Tax and Money Tip of the Week:
Want 4 Quick Tax Saving Tips – Hire
Your Spouse | October 31, 2012 | No. 116

Looking for a reliable and trustworthy employee? These days, who isn’t?
 
That person may be closer than you think. Why not hire your spouse? He or she probably already performs a number of company functions for no pay. Here are 4 tax benefits you may receive by employing your spouse.
 
Increase the amount of retirement savings
           
With your spouse as an employee, the company can deduct contributions to a qualified retirement plan on his/her behalf, which increases the amount of tax-deferred savings your family will have. Depending on the type of retirement plan the company maintains, this can result in a significant tax deduction for the company.
 
Shift taxable income to a lower tax rate
 
If your company is a C-corporation, any salary paid to your spouse is a deduction for the company. Assuming your personal tax rate is lower than the company’s tax rate, you will pay less tax on your spouse’s salary based on your lower tax rate.
 
Additional tax deductible travel expenses

Normally, travel expenses attributable to your spouse are not deductible if he/she accompanies you on a business trip. But, if your spouse accompanies you for a valid business reason as an employee of the company, the costs of his/her airfare, taxi, hotel, etc., would be deductible to the company.
 
Group-term life insurance

As an employee, your spouse would be entitled to life insurance coverage under the company’s Group Term Life Insurance plan.

Questions or Comments?

You can add comments on the blog, call 919-847-2981, or visit our web site. We look forward to hearing from you.

Mark Vitek, CPA/PFS, CFP®
…until next week.

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