Deductr Tax Tip
As a business owner, can I deduct medical expenses?
We often get this question at Deductr right around tax time.
The answer is yes, IF, you understand and apply this strategy in your business.
To be clear, money spent for medical purposes is always considered a personal expense. But a business CAN deduct employee benefits and if those benefits include medical expenses, those medical expenses can be deductible. But now you're saying to yourself, "I don't have any employees. So how does this apply to me and my business?"
Here's where this strategy comes into play.
If you employ your spouse, and you offer medical expenses as an employee benefit. Even if you or family members personally benefit from your spouse’s employee benefits, you can deduct them.
The IRS has ruled that such deductions are allowed for Sole Proprietor or Single LLC owner employee-spouse as long as it is set up correctly. Done right, you can deduct health insurance premiums, doctors, dentists, and eye-doctors visits, prescription drugs, co-pays and deductibles and even certain over the counter medical expenses.
This is a strategy where it would be wise to consult with a knowledgeable tax professional to make sure it’s set up correctly before applying it to your business, but this deduction alone can amount to thousands of dollars a year in converted personal to business expenses if it fits your circumstances.
Tip: When starting your business, don’t make your spouse your partner – make him or her your employee, so you can take advantage of this awesome deduction.
Always consult a competent tax professional to see if a particular tax strategy is right for your circumstances.