If you employ your spouse in your real estate business you have the option of providing him or her with tax-free employee fringe benefits, including health benefits. This can include not only health insurance that covers your spouse and the rest of the family, but a health reimbursement arrangement as well.
This is a fantastic way to maximize your deductions for health care expenses.
If you’ve already done this, congratulations. You’re way ahead of the curve.
However, the IRS recently issued a revised Form 720, “Quarterly Excise Tax Return,” to provide for the reporting and payment of fees imposed on specified health insurance issuers and plan sponsors of certain self-insured health plans by the Patient Protection and Affordable Care Act of 2010 (“Affordable Care Act”).
The fees help fund the Patient-Centered Outcome Research Institute (“PCORI”), which is intended to assist research efforts to help patients, clinicians, purchasers and policymakers make informed health decisions. For many plans (including calendar year plans), the initial PCORI fee must be paid by July 31, 2013.
In general, the applicable insurance company pays the PCORI fee for specified health insurance plans, and the plan sponsor is responsible for the payment of the PCORI fee owed with respect to a self-insured health plan. This memorandum describes the PCORI fee payment requirements that apply to self-insured health plans.
Payment of PCORI fees
The PCORI fee is required to be reported annually on IRS Form 720. The Form 720 is due on July 31 of the year following the last day of the plan year.
The IRS recently updated the Form 720 and instructions to address the PCORI fee. For plan sponsors that file Form 720 solely to report the PCORI fee, only one Form 720 needs to be filed annually (i.e., even though the Form 720 is a quarterly tax form, only a single Form 720 should be filed for the second quarter of each year).
Payment should be made with the related payment voucher, Form 720-V. Form 720 and Form 720-V can be found at www.irs.gov/pub/irs-pdf/f720.pdf, and the instructions can be found at www.irs.gov/pub/irs-pdf/i720.pdf .
PCORI fees are deductible
Plan sponsors received some good news recently when the IRS ruled that the PCORI fees paid are considered ordinary and necessary business expenses and, therefore, are deductible under Section 162 of the Internal Revenue Code.
Stephen Fishman is a tax expert, attorney and author who has published 18 books, including “Working for Yourself: Law & Taxes for Contractors, Freelancers and Consultants,” “Deduct It,” “Working as an Independent Contractor” and “Working with Independent Contractors.