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S-corp health insurance tax reporting

originally posted: 11/22/2006 reposted: 2/18/2011 This post has not been recently reviewed or revised by the author and may be out of date. If in doubt, please send a new question or ask for an update.

Q: How are the premiums for health insurance for an S-corporation owner reported on a W-2 form and the form 1120S?

A: There are three steps of the tax reporting: 1) the corporate tax return, 2) the form W-2, and 3) the individual tax return. On the Form 1120S corporate tax return the premiums are included in compensation to shareholders. On the W-2 the health insurance premiums paid for the 2% shareholders should be included in Box 1 with a memo in Box 14. The premiums would not be included in Box 3 & 5, the FICA & Medicare boxes. On the individual's Form 1040 the premiums are deducted on line 29. The net effect is that the premiums are deductible by the business and not taxable income to the employee.

S-corp health insurance tax reporting

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