Lease operator is working well for me so far

You are missing the point. It isn't about the health insurance. Its about the total pay package, which includes healthcare. If a guy can make x dollars pay package as an employee then he needs to make x plus y percentage as a business owner. Going into business to make the same as an employee is just stupid.

 

I understand you point 100%.. And I agree with what you originally posted. As I stated, I am currently missing out on a 401k and disability insurance that I received as a company driver. However, unlike many other drivers, I did not rely on the health care coverage from the company, so that does not effect my current situation. Out of the "total pay package" that you mentioned, they all effect me with the exception of health care expense.

 

While I am eligible for both VA and have Tri Care since I was given a medical retirement from the Army, I use none of it. I have my reasons for choosing that path. I have my own BCBS medical insurance and even paying for that for me and with wife, I still do far better than I ever did as a company driver. I never came close to the $80K+ I netted last year as a company driver, after medical insurance costs and all other costs. Am well on target to do equally as well this year, and probably beyond it by some margin. And yes... leased on to a carrier.

I finally had to form an LLC and set it up with the IRS as a S Corp for tax purposes, putting myself as a W-2 employee, so I could get taxes down. Even paying myself roughly $40K this year as an "employee" (with medical insurance provided in full by "my" company), the business net is on target to be roughly $51K which will be distributed to me on top of my "salary" as a "employee". Nice thing is, net distributions are exempt from FICA taxation, only income tax, so that is a hefty chunk of change that will not go to the government and will stay in my bank account.

 

You're saying that the single member S Corp is going to distribute dividends to you higher than your salary? If so, everything I have read, including what my CPA confirmed to me when I set mine up, that's a red flag audit waiting to happen. A cursory search on the benefits of such an entity explain that the target ratio is 75% salary wages 25% dividends.

What you're doing (correct me if I'm wrong) is 40% salary wages 60% dividends. I'd hate to see you encounter problems with IRS on an audit where they challenge your percentages.

 

Also, as far as your business paying your full health insurance premium, there are limitations on that as well.

The IRS has clarified these limitations for greater than 2% holders in an S Corp.

The premium amount paid is to be included in your W-2 wages received from the S Corp. You then write that off on your 1040.

The net benefit deduction in that scenario is not reducing the profit, or in your case, the dividend distributed by 100% of the premium paid. It's only effecting the AGI on your 1040.

http://loopholelewy.com/loopholelew...orporations-08-deducting-health-insurance.htm

 

Double post deleted.

 

I agree here. I'm an s Corp and a w 2 employee of it. Saves thousands in fica tax.

 

Whether I write the health insurance premiums off as a business expense or a personal expense is irrelevant. They are going to get written off one way or another.

 

Wow someone who is smart, avoiding government health care and going with a universal provider, bcbs.

For those who do this, as an o/o, why form an llc and then treat it like an s Corp, why not just go to an s Corp and enjoy the benefits.

 

Because I get the best of both worlds by doing a LLC and having an S Corp tax structure....

http://www.bizfilings.com/toolkit/news/tax-info/llc-plus-scorp-equal-best-of-both.aspx