Itemized deductions are an optional deduction taxpayers can take on tax returns for things such as medical expenses, property taxes, mortgage interest, and charitable contributions.
When examining whether an HRA is appropriate for a sole proprietor, it's important to look at cash flow, not just the pure tax savings.
Are HRAs always appropriate for sole proprietors? An HRA will almost always save on taxes, but maybe not as much as advertised.
Are HRAs always appropriate for sole proprietors? Usually, but not always.
I like to say that there are two types of dependents in the tax world: a "dependent dependent" and a "medical dependent." A "dependent dependent" is someone who you claim as a dependent on your tax return. (Note that the "dependent dependent" terminology is something I made up; it's not intended to be a technical term!) [...]