Build the Tent: How a Michigan C-Corp Can Tame Your Income

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Build the Tent: A Michigan C-Corp That Pays You (Legally)

We’ve seen the Acrobat’s tightrope, the Magician’s income-vanishing illusions, and the Strongman’s home-equity power. Now the Ringmaster brings order: a Michigan C-Corporation that lets you take a predictable W-2 salary while the company legally covers business costs under an accountable plan. The goal isn’t tax evasion; it’s structure—so your MAGI stays in range for programs you qualify for while you still run a real business.

Act I: Raise the Tent — Forming Your Michigan C-Corp

File Articles of Incorporation with Michigan’s LARA, get an EIN, open a dedicated business bank account, and keep clean books. After formation, you’ll file a brief annual report each year:

• Where: Michigan Department of Licensing and Regulatory Affairs (LARA)
• Due date (profit corporations): May 15 each year (online filing opens Jan 15)
• Fee: $25

(Pro tip: file directly through LARA’s portal; ignore third-party “past due” mailers.)

Act II: The Salary Whip & the Accountable Plan

1. Set a reasonable salary. As an officer/employee of your C-Corp, pay yourself a W-2 that’s reasonable for the work you perform (IRS looks for comparables). This is the income that counts toward MAGI. If you’re targeting benefits tied to FPL thresholds—for example, ≤133% FPL (~138% with disregard) for Healthy Michigan Plan, or ≤200% FPL for some energy programs—calibrate your salary accordingly.
2. Use an Accountable Plan for expenses. Adopt a written policy and reimburse business expenses that meet the IRS’s three tests:
   • Business connection (ordinary & necessary for the business),
   • Substantiation (timely receipts/mileage logs), and
   • Return of excess (send back any unused advances).
   Payments under an accountable plan are not wages, excluded from the employee’s income, & not subject to FICA/FUTA—so they don’t raise MAGI.

Act III: The Deduction Parade — Worked Example

• Revenue: Your C-Corp collects $60,000 from sponsorships/ads.
• Salary: You set a $35,000 W-2 (reasonable for your role and hours). This is your MAGI driver.
• Expenses via Accountable Plan: The company reimburses $20,000 (travel, gear, software) with receipts—not taxable wages.
• Remainder: $5,000 stays in the business for taxes/cash cushion.

Why this helps: Your personal taxable income is the salary you set (subject to reasonableness). Properly documented reimbursements don’t hit your W-2 or MAGI, helping you remain under the thresholds relevant to your household while you still operate professionally.

Encore: Guardrails the Ringmaster Follows

• Reasonable compensation: Under- or over-paying yourself can trigger IRS scrutiny (e.g., disguised dividends). Document how you arrived at salary.
• Dividends ≠ reimbursements: Corporate dividends are taxable to you and do increase MAGI; use them judiciously.
• FPL checkpoints (2025): 2-person household FPL = $21,150; 200% FPL = $42,300. Healthy Michigan Plan screens at ≤133% FPL (≈138% with 5% disregard) using MAGI.
• Paper trail: Keep your policy, expense reports, and receipts. Pay reimbursements from the corporate account.

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Suggested Tools & Guides

• Tax-Free Wealth: How to Build Massive Wealth by Permanently Lowering Your Taxes
• Brother DS-640 Compact Mobile Document Scanner
• SentrySafe HD4100 Fire/Water Document Box
• Clever Fox Budget Planner
• iHealth Track Smart Upper-Arm BP Monitor

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Read the full series:

1. Part 1 — The Tightrope: What an Extra $10,000 Does to Your Michigan Benefits
2. Part 2 — The Magician’s Hat: How Roth & HSA Tricks Can Lower Your Income
3. Part 3 — The Strongman Brothers: A High-Wire Act with HELOC & HECM
4. Part 4 — The Full Circus: Stacking Michigan Benefits for Maximum Value
5. Finale — Build the Tent: How a Michigan C-Corp Can Tame Your Income

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Sources

1. LARA — Annual Reports: profit corp due May 15; online opens Jan 15.
2. LARA — Fee reminder (file direct; beware third-party solicitations). $25 annual statement fee noted by LARA.
3. LARA — Corporations: Articles of Incorporation basics.
4. Treas. Reg. §1.62-2 — Accountable plans (business connection, substantiation, return of excess) • PDF excerpt (treatment: not wages / not subject to FICA/FUTA).
5. IRS Pub 463 — travel/car/gift expense rules and reimbursements.
6. IRS — Paying yourself; officers are generally employees; compensation must be reasonable.
7. HHS — 2025 Federal Poverty Guidelines (2-person FPL = $21,150) • DOE/WAP — 200% table (2-person = $42,300).
8. Healthy Michigan Plan — MAGI-based eligibility ≤133% FPL (~138% w/ disregard).