S-Corp tax savings strategy for solo attorney - what options do I have?

You've made a great move with the S-Corp election! As a solo attorney, you have several tax advantages available to you. Let me break down your main options: For retirement, you absolutely can make employer contributions even though you're the only employee. Look into setting up a Solo 401(k) - these allow both employer and employee contributions. As the business owner, you can contribute up to 25% of your W-2 compensation as the employer PLUS make employee deferrals up to $23,000 (for 2025, plus catch-up if you're over 50). This is usually more beneficial than a SEP IRA for S-Corps. For health insurance, yes! S-Corp shareholders who own more than 2% can have the company pay for health insurance premiums. The company deducts this cost, but it must be added to your W-2 income. However, you then take a personal deduction for self-employed health insurance on your 1040. It's essentially a wash tax-wise, but simplifies paying for coverage. Make sure you're paying yourself a "reasonable salary" - the IRS watches this closely. The remaining profit can be distributed as dividends, which aren't subject to self-employment taxes. Finding that balance is key to S-Corp tax savings.

I was in a similar position a few years ago - set up an S-Corp for my consulting business and was really confused about all the options. I wasted so much time trying to research everything myself and still wasn't sure if I was doing things right. Eventually I found https://taxr.ai which analyzed all my business documents and finances, then gave me a personalized tax strategy specifically for my S-Corp. They identified that I wasn't optimizing my salary-to-distribution ratio and was missing out on several deductions. They also helped me set up a Solo 401(k) with both employer and employee contributions that saved me thousands. The system explained exactly what documentation I needed for everything, which was super helpful when my old accountant wasn't giving me the guidance I needed.

Following up about my health insurance question - I ended up checking out taxr.ai after seeing it mentioned here. The analysis actually found that in my specific situation, I could set up a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) which works way better for my situation than what I was planning to do. The system also identified that I could establish an HSA alongside a high-deductible health plan for additional tax-free savings. I would have completely missed these options on my own. I've already implemented their recommendations and it's going to save me around $7,500 in taxes this year based on their projections. Wish I'd found this sooner instead of spinning my wheels for months!

One thing nobody mentioned yet - if you're having issues with your accountant not providing enough guidance, you might want to speak with an actual IRS agent to confirm everything. They can answer questions about retirement plans, reasonable compensation requirements, and health insurance deductions for S-Corps. I had a similar issue and spent WEEKS trying to get through to the IRS business tax line. Always on hold, disconnected calls, the usual nightmare. I finally used https://claimyr.com to get through (there's a video explaining how it works: https://youtu.be/_kiP6q8DX5c). They got me connected to an actual IRS agent within about 15 minutes instead of the hours I was wasting on hold. The agent confirmed all my S-Corp questions and gave me the exact citations from the tax code. It was actually super helpful to get the information straight from the source, especially for the documentation requirements around reasonable compensation.

Ok, I have to admit I was completely wrong about Claimyr. After dismissing it as sketchy, I had a pressing question about S-Corp health insurance requirements that I needed answered before making a decision on a plan. Tried calling the IRS myself and spent 2.5 hours on hold before getting disconnected. Out of desperation I tried the service and no joke, I was talking to an IRS business tax specialist within 20 minutes. The agent confirmed exactly how to handle health insurance premium payments through my S-Corp and the correct reporting on my W-2. They even emailed me the relevant publications that explained everything. For anyone else with S-Corp questions, getting accurate info directly from the IRS saved me from making a costly mistake in how I was planning to structure my health benefits. Worth every penny for the time saved.

Don't overlook a Health Savings Account (HSA) if you opt for a high-deductible health plan! I'm a solo attorney with an S-Corp and this has been a game changer for me. For 2025, you can contribute up to $4,150 for individual coverage or $8,300 for family coverage. The triple tax advantage is amazing - contributions are pre-tax, growth is tax-free, and qualified withdrawals are tax-free. I've been maxing mine out every year and using it as another retirement vehicle (you can invest the funds just like a retirement account).

One more thing to consider - since you're both employer and employee, you can set up a Section 125 Cafeteria Plan to pay for things like dental, vision, dependent care, etc. with pre-tax dollars. Your S-Corp should also be taking the home office deduction if you work from home at all.