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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been recently reviewed or revised by the author and may be out of date.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.
Summary
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