Can the corporation pay for an employees out of pocket medical expenses say a procedure not covered by health insurance or the deductible portion of the medical insurance and have it be a business expense?
Yes - but such payment is a fringe benefit and should be included into employee's wages.
A corporation may also establish a Flexible Spending account (FSA) for employees - contributions to this account from employee's wages are exempted from an income tax and from FICA taxes.
Let me know if you need any help.
Contributions into an employee's Flexible Spending account (FSA) are not subject of FICA taxes - social security and Medicare - and are not included into earnings for social security purposes.
Another way - to establish a retirement plan for your employer - while employee's contributions are subject of FICA and are included into earnings for social security purposes - employer's matching contribution are not.
For tax treatment of other types of payments and fringe benefits - see IRS publication 15 page 32 - http://www.irs.gov/pub/irs-pdf/p15.pdf - see Social Security and Medicare tax treatment in the middle column.
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