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Grab 5 Quick Tax Perks: Put Spouse on Payroll
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41-18 CRESCENT ST
LONG ISLAND CITY, NY 11101
718-707-0295
47-46 VERNON BLVD
SECOND FLOOR
LONG ISLAND CITY, NY 11101
718-707-0295
Hernan Barona, E.A
hernan@savignano-cpa.com
www.savignano-cpa.com
ObtainMyRefund.com
BY JOHN SAVIGNANO, CPA
Strategy: Hire your spouse to
work as an official employee.
Why put your spouse on the
payroll? Because you can gain
five tax benefits:
1. Build up tax-favored
funds for retirement.
If you meet the tax-law
requirements, your company
can deduct contributions
made to a qualified retirement
plan on your spouse’s behalf.
The annual limits are quite
generous. If your company has
a defined contribution plan,
you can deduct contributions
up to 25% of compensation or
$54,000, whichever is less.
With a 401(k) plan, another
dollar limit applies: Your
spouse can defer up to $18,000
to the plan in 2017 (plus an
extra $6,000 if he or she is age
50 or older). Your company
can match those contributions
wholly or partially up to taxlaw
limits.
2. Shift taxable income
away from the company.
If you operate a C corporation,
any compensation you
pay to your spouse would
have to stay with the company.
Assuming your corporation
is in a higher tax bracket
than your personal tax bracket,
you’ll save tax overall if your
spouse draws a salary.
3. Get more tax mileage
from business trips.
Generally, you can’t deduct
the travel expenses attributable
to your spouse if he or she
accompanies you on a business
excursion. However, if your
spouse is a bona fide company
employee and goes for a
valid business reason, you may
deduct his or her travel costs,
including air fare, lodging and
50% of the meal expenses. The
benefit is also tax free to your
spouse.
4. Cure health insurance
coverage ills.
If you’re already paying more
to cover your spouse under
your company health insurance
plan, hiring him or her
shifts the expense to your company.
Typically, your company
can deduct your spouse’s full
health insurance cost.
5. Join the employer-paid
life insurance group.
Your spouse is entitled to the
same group-term life insurance
coverage as your other
employees.
John Savignano is a partner
with Savignano Accountants &
Advisors located at 47-46 Vernon
Blvd., Second Floor, in Long
Island City. If you have any questions
or require additional information,
please call John at 718-
707-0955.
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