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MequonCPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 2342
Experience:  CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.
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I am the owner of a sole proprietorship and my husband is the

Resolved Question:

I am the owner of a sole proprietorship and my husband is the only employee (part-time), performing essential services for the business. I am establishing an HRA for this business and will fund it for him and his dependent (me) at a level to cover insurance premiums. Can he work for this HRA benefit only with $0 wages and no W-2?
Submitted: 5 years ago.
Category: Tax
Expert:  MequonCPA replied 5 years ago.

Hi and welcome to JustAnswer:


The HRA benefits are reimbursements for expenses to employees. To provide the benefit an individual must be at least a part time employee and have compensation that is at least taxable for social security and medicare purposes. The reimburement is an expense of the business not a reduction of compensation for the employee. It is important to determine the proper reimbursement level based on compensation. As an extreme example, compensation of $100 per month not likely to support a $20,000 reimbursement amount. You should work with one of the company's that administers these type of plans to determine the appropriate compensation and reimbursement level.

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