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I am the owner of a sole proprietorship and my husband is the

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only employee (part-time), performing essential...
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: 6 years ago.Category: Tax
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Answered in 21 minutes by:
6/1/2011
Tax Professional: MequonCPA, Certified Public Accountant (CPA) replied 6 years ago
MequonCPA
MequonCPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 2,342
Experience: CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.
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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.

MequonCPA
MequonCPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 2,342
Experience: CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.
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MequonCPA
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Category: Tax
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Experience: CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.

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