Any Real Estate Professionals Using Section 105 for Health Insurance Deductions?

[Harry McNamara]

Hello BP community!

Question is pretty much in the title - any other self employed RE professionals using a Section 105 on your taxes to offset insurance and medical costs? Curious if you got any pushback from your accountant, or if there is a boilerplate form to self record the establishment of the program going forward. Not sure if I should tap an attorney, or my accountant, or if I can just do it myself. 

Thank you fellow tax savers!

[Jeff Nash]

Yes, I use that strategy with clients when they are a good fit.  Feel free to reach out and I can help.

[Peter Sosnow]

@Jeff Nash. What determines a good fit?

[Jeff Nash]

Since you are dealing with health insurance it depends on you and your family’s needs and expected heath expenditures and the plan you are enrolled in or choose.  Ultimately what you are trying to do is not limit your tax deduction to the typical health insurance premiums only, but rather have the deduction cover all health costs that generally can only be deducted if you itemize and clear the AGI hurdle.  The other consideration is whether you just use an HSA which is arguably one of the best tax strategies out there (again, it depends on the taxpayer’s needs for health insurance), the limitation being that the contribution allowed is not higher and closer to a 401k.  Hopefully this helps. 

[Chris Picciurro]

I agree with @Jeff Nash. We use that strategy when this fact pattern exists:

1) High Schedule C net income
2) No employees
3) Spouse works in business
4) Non-deductible medical expenses

In the situation above it makes sense to hire the spouse and provide Section 105 plan benefits. The tax savings must exceed the compliance costs.