top of page

26. Benefits of Hiring A Spouse as An Employee - Part 2

Updated: May 13, 2022

Unfortunately, you may have been forced 10 lay off or furlough workers during the pandemic, but now you're short-staffed.

Strategy: Hire your spouse, especially if he or she is already pitching in. Make them an official company employee, with all that, entails, including filing the proper paperwork with the IRS.

Of course, your spouse will owe income and payroll taxes on wages, just like any other new hire, but he or she can also pocket company benefits, subject to tax-law eligibility rules.

Here are four ways to sweeten the pot.

3. Cure health insurance ills.

If you're currently paying more to cover your spouse under the company's health insurance plan, hiring your spouse shifts the expense to the company.

The company can deduct the full cost of the health insurance paid for your spouse, just as it can for other employees. If you're self-employed, you can generally write off 100% of the cost.

4. Join the life insurance group.

Similar to health insurance, a business owner's spouse is entitled to the same group-term life insurance coverage as other employees in the company (e.g., equal to three or four times the salary).

Key point: The first $50,000 of employer-paid group-term life insurance coverage is tax-free to the employee. Also, any additional coverage is taxable under relatively favorable rules.

These perks are particularly advantageous when the business entity is a C corporation.

Idea: Set up a cafeteria plan offering a variety of fringe benefits. As a result, your spouse and employees only take advantage of those benefits they choose.

Tip: Some benefits provided to S corporation employees who are also more-than-2% share-

holders and their spouses are taxable. Consult your tax pro for details.

Tax Preparation, Payroll, Accounting, Tax Planning Call us at (800) 913-0809 or send an SMS (224) 676-3577 if you have any questions.

5 views0 comments


bottom of page