If you take
numerous business trips with your spouse, you may be able to deduct the full cost of the
trip provided you can establish a business reason for your spouse's presence. If
your spouse is not an employee, establishing that business reason would be virtually
If your salary is
currently in excess of the maximums allowed under your company's qualified retirement plan
(see our Federal Tax Database
for current limitations), you may be able to shift some of your salary to your spouse
in order to increase your combined retirement contributions.
business is operated as a sole proprietorship with no employees, you may currently only
deduct a percentage of your personal health insurance premiums.
By adding your spouse as an
employee, you could establish a health plan covering all employees which would then become
a legitimate, fully-deductible business expense. Your spouse could be covered under
a family plan which would include you and any other dependents.
If your business
operates as a C corporation and you have concerns that the IRS may consider your
compensation unreasonable, hiring your spouse or other dependents can give you a means of
taking profits out of the business without having to pay taxable dividends on earnings
already taxed at the corporate level.
As we stated above, the IRS can indeed challenge
the employment of your spouse if they consider it a sham just to avoid taxes. We can
certainly assist you if you feel that employing your spouse is an option you would like to