The health insurance premiums paid on behalf of more-than-2% S corporation shareholder-employees are deductible and reportable by the S corporation as wages, the payments are included in the shareholder’s wages for income tax purposes, and the benefits are not subject to Social Security or Medicare (FICA) or …
Where is shareholder health insurance on W 2?
The health insurance premiums paid by the S corporation are reported on Form W-2, Box 14 S. This is the amount the shareholder deducts on page 1 of Form 1040, line 29 (Self- employed health insurance deduction)
Can a 2% shareholder have health insurance?
Health Insurance for S Corporation 2% Shareholders. The cost of health insurance premiums paid by an employer is usually excluded from taxable income on the employee’s W-2. A more than 2% shareholder of an S corporation is not eligible for this exclusion.
How are 2% shareholders eligible for tax deductions?
However, 2% shareholders can deduct the premiums using the self-employed health insurance deduction their personal federal income tax return (i.e., on Form 1040). A 2% S corporation shareholder is not eligible to participate in a cafeteria plan created under IRC Section 125, nor can the shareholders’ spouse, child, grandchild or parent participate.
Who is a 2% shareholder in a S corporation?
If so, you need to know how 2% shareholder health insurance works for S corporations. What is a 2% shareholder? According to the IRS, a 2% S corporation shareholder is someone who owns more than 2% of the company’s stock at any time during the year. This also applies to individuals who own more than 2% of the company’s voting power.
Can a 2 percent shareholder claim an AGI deduction?
As far as premium payments and the personal deduction for AGI, it’s important that the corporation make the premium payment or reimburse the 2 percent shareholder making the payment. The 2 percent shareholder cannot make the payment personally and claim the deduction unless the corporation provides reimbursement.
