I thought a self-employed person could not participate in an HRA or medical reimbursement plan?
A self-employed person may hire his/her spouse and establish a fringe benefit plan for him/her to reimburse medical expenses of the employee, his/her spouse and dependents. Rev-ruling 71-588 ISSUES: (1) Whether A, a sole proprietor, is entitled to deduct under section 162(a) of the Internal Revenue Code amounts paid to B, A’s spouse and employee, as reimbursement of medical expenses under an employer-provided accident or health plan. (2) Whether amounts B receives as reimbursement of expenses that B incurs on behalf of B, A, and their dependents are excluded from B’s gross income under section 105(b). FACTS: A operates a consulting business as a sole proprietor and employs B, A’s spouse, to perform certain services in connection with the business. B receives compensation for the services B performs and includes the compensation in gross income on the couple’s jointly-filed federal income tax return. A adopted a written employer-provided accident and health plan that, by its terms, cove
