A terrific end-of-year tax planning strategy for small business owners is as simple as hiring a new employee! However, let’s hire a trustworthy and reliable person — your spouse.

Hiring a spouse as an official employee can garner tangible tax benefits:

  • Contributions to allowable retirement plans can be deducted by the firm.
  • Income-shifting becomes a possible benefit for C-Corps when tax brackets are amenable. S-Corps and sole practitioners have less benefit due to flow through of earnings and tax brackets.
  • A better business trip. Generally there is no deduction if your spouse goes on a business trip with you. However, if he or she is an employee going on a legitimate business trip, you have deductions.
  • Health insurance cost can be shifted to the company.
  • If your company has employer-paid group life insurance, your spouse gets entitlements.

Certainly, these 5 benefits have details, limitations, and exceptions. At WFS, we work with CPA’s and accounting firms that help our clients navigate the terms.

Conveniently located in Central New York state, Wolfson Financial Services is a financial planning and consulting firm dedicated to helping individuals, families and organizations reach their financial goals. If you have questions about this article or if you would like to become a client of Wolfson Financial Services, please call (315)449-4730.