End of Year Tax Planning - Health Benefits

Make sure to claim the federal tax credit equal to 100 percent of required (2020) and voluntary (2021) emergency sick leave and emergency family leave payments. It’s likely that you made payments that qualify for the credits.

1. IRC 105 Plan: If you have a Section 105 plan in place and you have not been reimbursing expenses monthly, do a reimbursement now to get your 2021 deductions, and then put yourself on a monthly reimbursement schedule in 2022.

   If you are a sole proprietor with no other employees, we will discuss this for implementation - this is used most commonly for traveling doctors who work in multiple practices and retired doctors who are working for the buying doctor through their old corporation.

2. QSHERA/ICHRA - If you reimburse for health insurance premiums and do not have a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) in place, make sure to get that done properly now. You are late, so you could suffer that $50-per-employee penalty should your lateness be found out.

   But if you are thinking of the QSEHRA and want to help your employees with more money and flexibility, be sure to consider the Individual Coverage Health Reimbursement Arrangement (ICHRA).

3. Deducting Health Insurance in an S Corp - If you operate your business as an S corporation and you want an above-the-line tax deduction for the cost of your health insurance, you need the S corporation to (a) pay for or reimburse you for the health insurance, and (b) put it on your W-2. Make sure that the reimbursement happens before December 31 and that you have the reimbursement set up to show on the W-2.

4. Employee Health Insurance Tax Credit - For practices offering health coverage, claim the tax credit for the group health insurance you give your employees. If you provide your employees with group health insurance, see whether your pay structure and number of employees put you in a position to claim a 50 percent tax credit for some or all of the monies you paid for health insurance in 2021 and possibly in prior years.