One of the greatest tax advantages available to the farmer or small business owner today is hiring their spouse as their employee.  This may not sound logical to you, but we believe that we can make this make sense to you.

By hiring your spouse, particularly if they are your only employee, there are many benefits that you can take advantage of.  One of the greatest benefit is the 100% deductibility of  your health insurance premiums.  If your spouse is a bona fide employee you can reimburse them for any health insurance premiums that they pay out of their pocket.  In addition to the health insurance premiums that they pay for themselves, you can also reimburse them for the health insurance premiums that they pay for their family, including their spouse and children.

Another option that is open to you as a farmer or small business owner, if you have no full time employees other than your spouse, is the election of a Section 105 medical reimbursement plan.  This not only allows you to reimburse your spouse for their health insurance premiums, but also their out of pocket costs for health care.  This includes doctor bills, eyeglasses, dental work, prescriptions, and any other health costs that your medical insurance does not cover.  

The Section 105 plan is probably not a good idea if you have employees other than your spouse.  If you choose this plan and do have other substantially full time employees you have to cover them with the plan as well.  This could become a very expensive plan if you choose to do this.  Please contact us for more information on this.  We are an authorized AgriPlan/BizPlan provider.

In addition to the opportunity to reimburse your spouses, and their families, medical expenses, you can also give your spouse pension plan coverage.  If you have a retirement plan, as a full time employee, your spouse can also receive this coverage.  This could make a major difference when it is time to retire.  This is another great advantage of hiring your spouse.  

Of course, by hiring your spouse you will be required to cover them with social security and medicare.