SCHEDULE C HRA

[Lee B]

Scenario:  Husband owns sole proprietorship with an established HRA, wife is only employee.

 

Husband over 65 on medicare deducts medicare premiums as self employed health insurance on

 

page 1. In July 2014, wife turns 65 and retires from outside job. The new HRA rules generally

 

exempt employers with less than two employees from having to meet ACA requirements.

 

Question:  Can the sole proprietorship HRA reimburse the wife (employee) for her medicare

 

premiums and thus deduct them on the Schedule C ?

 

 

On Wednesday, I attended a Tax Update Class where the presenter  discussed a similar situation.

 

In his opinion, the compliance window is very narrow which would require:

 

1.  The spouse could not be a signer on the business checking account, only the husband.

 

2.  The reimbursement checks could not be deposited into a joint checking account, must be a spouse only

     

       checking account.

 

3.  The H R A must be administered by an outside third party.

 

 

In his opinion, if the standard employer/employee relationship becomes too tainted by the spousal

 

relationship then the HRA deduction becomes very questionable.

 

Comments ?   ( Note :  This presenter was not one to push the envelope )

[Jack from Ohio]

NO.  Can't do the reimbursement pretax.