Some of the Solopreneurs out there have told me that they are paying for their Medical and Dental expenses with after-tax dollars, in other words with their salary…and that’s that!
Fair enough. Some Solopreneurs are being pulled in different directions all the time and don’t have time to listen to, “Do you want to hear about a more tax-effective way to pay for your personal Health & Dental expenses?”.
When the time comes that they do have enough time to dig a little deeper, they will find that there really isn’t much to gain having their Medical and Dental expenses processed through their Personal Income Tax submission. Let’s take a look at an example.
DISCLAIMER – I am not an Accountant and the following should not be considered tax advice…just food for thought. Everyone’s tax situation is different and you should seek advice from your Accountant to determine how much this makes sense for you.
- Net Income of $50,000 per year
- Household medical expenses of $1,600 per year
- This adds up to either
- a $25.00 Personal Income Tax Credit* or,
- a $1,760.00 Business Tax Deduction
*Medical Expense Tax Credit based on a combined Federal and Provincial rate of 25%. Applicable taxes apply.
Have the conversation with your Accountant to see what is best for your situation.
Located in Cambridge, ON Sharkey Group Insurance provides independent Employee Benefits advice & counsel for Small Businesses across Ontario.